def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
PROGRESS SOFTWARE CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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TABLE OF CONTENTS
PROGRESS
SOFTWARE CORPORATION
14 Oak Park
Bedford, Massachusetts 01730
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
of Progress Software Corporation will be held on April 24,
2008, commencing at 10:00 a.m., local time, at our
principal executive offices located at 14 Oak Park, Bedford,
Massachusetts 01730, for the following purposes:
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1.
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To fix the number of directors constituting the full Board of
Directors at six;
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2.
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To elect six directors;
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3.
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To adopt and approve the Progress Software Corporation 2008
Stock Option and Incentive Plan;
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4.
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To ratify the selection of Deloitte & Touche LLP as
our independent registered public accounting firm for fiscal
year 2008; and
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5.
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To transact such other business as may properly come before the
annual meeting and any adjournment or postponement of that
meeting.
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Our Board of Directors has fixed the close of business on
February 27, 2008 as the record date for determination of
the shareholders entitled to receive notice of and to vote at
the annual meeting and any adjournment or postponement of that
meeting.
By Order of the Board of Directors,
James D. Freedman
Secretary
March 24, 2008
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE. A
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
PROGRESS
SOFTWARE CORPORATION
14 Oak Park
Bedford, Massachusetts
01730
This proxy statement is being furnished in connection with the
solicitation by the Board of Directors of Progress Software
Corporation of proxies for use at the 2008 Annual Meeting of
Shareholders to be held on April 24, 2008, at
10:00 a.m., local time, at our principal executive offices
located at 14 Oak Park, Bedford, Massachusetts 01730. We
anticipate that this proxy statement and the accompanying form
of proxy will first be mailed to shareholders on or about
March 24, 2008.
Important Notice Regarding the Availability of Proxy
Materials for the Annual
Meeting of Shareholders to Be Held on April 24, 2008:
This proxy statement and our 2007 Annual Report to
Shareholders are available at:
http://www.amstock.com/ProxyServices/ViewMaterials.asp
At the annual meeting, shareholders will be asked to consider
and vote upon the following proposals:
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1.
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To fix the number of directors constituting the full Board of
Directors at six;
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2.
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To elect six directors;
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3.
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To adopt and approve the Progress Software Corporation 2008
Stock Option and Incentive Plan (the 2008 Plan);
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4.
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To ratify the selection of Deloitte & Touche LLP as
our independent registered public accounting firm for fiscal
year 2008; and
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5.
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To transact such other business as may properly come before the
annual meeting and any adjournment or postponement of that
meeting.
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You may obtain directions to the location of the annual meeting
by visiting our website at www.progress.com.
VOTING
PROCEDURES
Only holders of record of our common stock, par value $.01 per
share, outstanding at the close of business on February 27,
2008 are entitled to vote at the annual meeting and any
adjournment or postponement of that meeting. As of that date,
there were 41,428,011 shares outstanding and entitled to
vote. Each outstanding share entitles the holder to one vote on
any proposal presented at the annual meeting. A list of the
shareholders entitled to notice of the annual meeting is
available for inspection by any shareholder at our principal
executive offices at the address above.
Any shareholder who has given a proxy may revoke it at any time
prior to its exercise at the annual meeting by giving written
notice of such revocation to our Secretary, by signing and duly
delivering a proxy bearing a later date, or by attending and
voting in person at the annual meeting. Duly executed proxies
received and not revoked prior to the annual meeting will be
voted in accordance with the instructions indicated in the
proxy. If no instructions are indicated, such proxies will be
voted FOR each of the proposals set forth above, and in the
discretion of the individuals named in the proxy as to other
matters that may properly come before the annual meeting or any
adjournment or postponement of that meeting.
A quorum at the annual meeting will consist of a majority in
interest of the shares of our common stock outstanding on the
record date for the meeting. Votes withheld from any nominee for
election as director, abstentions and broker
non-votes will be counted as present or represented
at the annual meeting for purposes of determining the presence
or absence of a quorum for the meeting. A broker
non-vote occurs when a broker or
other nominee who holds shares for a beneficial owner withholds
its vote on a particular proposal with respect to which it does
not have discretionary voting power or instructions from the
beneficial owner. Abstentions and broker non-votes
with respect to a proposal are not included in calculating the
number of votes cast on the proposal and, therefore, do not have
the effect of voting against the proposal. An automated system
administered by our transfer agent tabulates the votes.
Some banks, brokers and other nominee record holders may be
participating in the practice of householding proxy
statements and annual reports. This means that only one copy of
this proxy statement and our 2007 Annual Report to Shareholders
may have been sent to multiple shareholders in a single
household. We will promptly deliver a separate copy of either
document to shareholders who so request by calling or writing to
us at the following address: Progress Software Corporation, 14
Oak Park, Bedford, Massachusetts 01730, phone:
781-280-4000,
Attn: Investor Relations, or by submitting an email request to
finance-info@progress.com.
Shareholders who would like to receive separate copies of our
annual report and proxy statement in the future, or who would
like to receive only one copy per household, should contact his
or her bank, broker or other nominee record holder, or contact
us at the above address, phone number or email.
PROPOSALS 1
AND 2: ELECTION OF DIRECTOR NOMINEES
Our by-laws provide for a Board of Directors, the number of
which shall be fixed from time to time by our shareholders and
may be enlarged or reduced by vote of a majority of the Board.
Currently our Board of Directors is comprised of seven members.
Upon the recommendation of the Nominating and Corporate
Governance Committee, our Board of Directors has proposed that
the number of directors be fixed at six, and has nominated for
election as directors Joseph W. Alsop, Barry N. Bycoff, Roger J.
Heinen, Jr., Charles F. Kane, David A. Krall and Michael L.
Mark, each of whom is currently a director of our company. Scott
A. McGregor, who has been a director of our company since 1998,
will not stand for re-election to the Board at the annual
meeting. Each director elected at the annual meeting will hold
office until the next annual meeting of shareholders or special
meeting in lieu of such annual meeting and until his successor
has been duly elected and qualified, or until his earlier death,
resignation or removal. There are no family relationships among
any of our executive officers or directors.
Each of the director nominees named in this proxy statement has
agreed to serve as a director if elected, and we have no reason
to believe that any nominee will be unable to serve. In the
event that before the annual meeting one or more nominees should
become unwilling or unable to serve, the persons named in the
enclosed proxy will vote the shares represented by any proxy
received by our Board of Directors for such other person or
persons as may thereafter be nominated for director by the
Nominating and Corporate Governance Committee and the Board.
If a quorum is present at the annual meeting, a majority of the
votes properly cast will be required to fix the number of
directors at six, and a plurality of the votes properly cast
will be required to elect a nominee to the office of director.
Our Board of Directors recommends that you vote FOR the
proposal fixing the number of directors at six and FOR the
election of the following six individuals as directors: Joseph
W. Alsop, Barry N. Bycoff, Roger J. Heinen, Jr., Charles F.
Kane, David A. Krall and Michael L. Mark.
2
DIRECTORS
The following table sets forth the director nominees, their
ages, and the positions currently held by each person with our
company.
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Name
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Age
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Position
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Joseph W. Alsop
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62
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Co-Founder, Chief Executive Officer and Director
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Barry N. Bycoff(2)(3)
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59
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Director
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Roger J. Heinen, Jr.(1)(3)
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57
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Director
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Charles F. Kane(2)
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50
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Director
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David A. Krall(1)
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47
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Director
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Michael L. Mark(2)
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62
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Chairman of the Board
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Member of Compensation Committee |
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Member of Audit Committee |
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Member of Nominating and Corporate Governance Committee |
Mr. Alsop, our co-founder, has been a director and
Chief Executive Officer since our inception in 1981.
Mr. Bycoff has been a director since March 2007.
From 1996 to 2004, Mr. Bycoff was Chairman and CEO of
Netegrity, Inc. Mr. Bycoff is a private investor.
Mr. Heinen has been a director since March 1999.
From 1999 to 2008, Mr. Heinen was a Partner of Flagship
Ventures, a venture capital company. Mr. Heinen formerly
served as Senior Vice President, Developer Division, Microsoft
Corporation. Mr. Heinen also is a director of Monotype
Imaging Holdings Inc.
Mr. Kane has been a director since November 2006.
Mr. Kane is currently Senior Advisor to One Laptop Per
Child. From May 2006 to October 2006, Mr. Kane served as
CFO of RSA Security Inc. and from July 2002 to May 2006, as CFO
of Aspen Technology, Inc. Mr. Kane also is a director of
Netezza Corporation and Borland Software Corporation.
Mr. Krall has been a director since February 2008.
From 2000 to 2007, he served as President, CEO, and member of
the Board of Directors of Avid Technology, Inc. Prior to that,
Mr. Krall was Chief Operating Officer of Digidesign, the
audio division of Avid. Mr. Krall is currently an advisor
to high tech companies based in Silicon Valley and a private
investor.
Mr. Mark was elected Chairman of the Board in
December 2006, and has been a director since July 1987.
Mr. Mark is a private investor.
THE BOARD
OF DIRECTORS AND ITS COMMITTEES
Board of
Directors
Our Board of Directors met eight times during the fiscal year
ended November 30, 2007. 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 on which he served during fiscal year
2007. Our Board of Directors has standing Audit, Compensation,
and Nominating and Corporate Governance Committees.
3
Audit
Committee
The Audit Committee of our Board of Directors currently consists
of Messrs. Bycoff, Kane and Mark, with Mr. Kane
serving as Chairman. The Board has determined that each member
of the Audit Committee meets the independence requirements
promulgated by The NASDAQ Stock Market LLC, or NASDAQ, and the
Securities and Exchange Commission, or SEC, including
Rule 10A-3(b)(1)
under the Securities Exchange Act of 1934. In addition, the
Board has determined that each member of the Audit Committee is
financially literate and that Mr. Kane qualifies as an
audit committee financial expert under the rules of
the SEC. The Audit Committee met five times during fiscal year
2007.
The Audit Committee operates under a written charter adopted by
our Board of Directors, a copy of which can be found on our
website at
http://www.progress.com
under the Corporate Governance page. As described more fully
in its charter, the Audit Committee oversees our accounting and
financial reporting processes, internal controls and audit
functions. For fiscal year 2007, among other functions, the
Audit Committee reviewed with our independent registered public
accounting firm the scope of the audit for the year, the results
of the audit when completed and the independent registered
public accounting firms fees for services performed. The
Audit Committee also appointed the independent registered public
accounting firm and reviewed with management various matters
related to our internal controls.
Compensation
Committee
The Compensation Committee of our Board of Directors during
fiscal year 2007 consisted of Messrs. Heinen and McGregor,
with Mr. Heinen serving as Chairman. In March 2008,
Mr. Krall was appointed to the Compensation Committee. The
Board has determined that each member of the Compensation
Committee meets the independence requirements promulgated by
NASDAQ. The Compensation Committee met eight times during fiscal
year 2007. The Compensation Committee operates under a written
charter adopted by our Board of Directors, a copy of which can
be found on our website at
http://www.progress.com
under the Corporate Governance page.
In accordance with its charter, the Compensation Committee:
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oversees our overall compensation structure, policies and
programs;
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administers our stock option and other equity-based plans;
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reviews, and recommends to the Board for its approval, the
compensation of our Chief Executive Officer;
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reviews and determines the compensation of all officers (as
defined in Section 16 of the Exchange Act ) of our company
other than the CEO;
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reviews and makes recommendations to the Board regarding the
compensation of our directors; and
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is responsible for producing the annual report included in this
proxy statement.
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Our Chief Executive Officer, our other executives, and our human
resources department support the Compensation Committee in its
duties and may be delegated authority to fulfill certain
administrative duties regarding our compensation programs. In
addition, our Chief Executive Officer makes recommendations to
the Compensation Committee on an annual basis regarding salary
increases, potential bonuses, and stock option grants for each
of our other executive officers.
The Compensation Committee has sole authority under its charter
to retain, approve fees for, determine the scope of the
assignment of, and terminate advisors and consultants as it
deems necessary to assist in the fulfillment of its
responsibilities. In fiscal year 2007, the Compensation
Committee retained Radford Surveys + Consulting and Buck
Consultants to assist it in evaluating the compensation of our
officers and directors. Please read the
4
Compensation Discussion and Analysis included in
this proxy statement for additional information on the role of
Radford Surveys + Consulting and Buck Consultants in the
executive compensation process.
At the beginning of each fiscal year, the Compensation Committee
begins the process of reviewing executive officer and board
compensation for the coming fiscal year. The Committee members
are provided reports from external compensation consultants
comparing our executive compensation and equity grants relative
to the market and comparing our equity granting practices
relative to a peer group. Reports are also provided on board of
director compensation relative to the market and a peer group.
In addition, the Compensation Committee reviews recommendations
from management on the current fiscal year short-term incentive
programs relative to anticipated corporate performance.
In April, the Compensation Committee reviews and approves
changes to executive officers total target cash
compensation, which includes base salary and target bonus.
Changes, as discussed in the Compensation
Discussion and Analysis in this proxy statement, were
approved and implemented as of May 1, 2007.
In April, the Compensation Committee also reviews and makes
recommendations to the full Board of Directors regarding any
changes to Board compensation.
At the end of the fiscal year, the Compensation Committee
reviews preliminary results of the short-term incentive
programs, 401(k) match and 401(k) cash bonus in excess of
Federal limits. Final review and approval of these programs and
costs are completed in January of the following fiscal year
prior to any payments.
In accordance with our Stock Option Grant Policy, the
Compensation Committee meets four times a year to review and
approve stock option grant requests.
Communication with Committee members is accomplished through
in-person committee meetings, teleconference calls or email.
Members of management
and/or the
external compensation consultants participate in these various
communication methods and attend meetings or conference calls at
the invitation of the Committee.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee of our Board
of Directors currently consists of Messrs. Bycoff and
Heinen, with Mr. Heinen serving as Chairman. The Board has
determined that each member of the Nominating and Corporate
Governance Committee meets the independence requirements
promulgated by NASDAQ. The Nominating and Corporate Governance
Committee met two times during fiscal year 2007. The Nominating
and Corporate Governance Committee operates under a written
charter adopted by our Board of Directors, a copy of which can
be found on our website at
http://www.progress.com
under the Corporate Governance page.
In accordance with its charter, the Nominating and Corporate
Governance Committee:
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is responsible for identifying qualified candidates for election
to our Board of Directors and recommending nominees for election
as directors at the annual meeting;
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assists in determining the composition of the Board and its
committees;
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assists in developing and monitoring a process to assess Board
effectiveness; and
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assists in developing and implementing our Corporate Governance
Guidelines.
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A copy of our Corporate Governance Guidelines can be found on
our website at
http://www.progress.com
under the Corporate Governance page.
5
Director
Compensation
The following table sets forth a summary of the compensation
earned by or paid to our non-employee directors in fiscal year
2007.
DIRECTOR
COMPENSATION TABLE FISCAL YEAR 2007
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Fees Earned or
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Stock
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Option
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Paid in Cash
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Awards
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Awards
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Total
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Name
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($)
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($)(1)(2)
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($)(3)(4)
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($)
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Barry N. Bycoff(5)
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$
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61,407
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$
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184,201
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$
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36,481
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$
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282,089
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Roger J. Heinen, Jr.
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75,000
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224,985
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540,704
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840,689
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Charles F. Kane
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82,500
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247,465
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53,631
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383,596
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David A. Krall(6)
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0
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0
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0
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0
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Michael L. Mark
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87,500
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0
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261,209
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348,709
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Scott A. McGregor
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71,876
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215,601
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674,885
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962,362
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Amram Rasiel(7)
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0
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0
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0
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0
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(1) |
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Amount listed for each directors deferred stock unit
grants for fiscal year 2007 is calculated by multiplying the
number of deferred stock units by the closing price of our
common stock on the date of grant. |
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(2) |
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Amounts listed relate to the grant of fully vested deferred
stock units to the named directors as follows: Mr. Bycoff,
5,777 deferred stock units with an aggregate grant date fair
value of $184,201; Mr. Heinen, 7,096 deferred stock units
with an aggregate grant date fair value of $224,985;
Mr. Kane, 7,805 deferred stock units with an aggregate
grant date fair value of $247,465; and Mr. McGregor, 6,800
deferred stock units with an aggregate grant date fair value of
$215,601. Each director had the following fully vested deferred
stock units outstanding at November 30, 2007:
Mr. Bycoff, 5,777 deferred stock units; Mr. Heinen,
7,096 deferred stock units; Mr. Kane, 7,805 deferred stock
units; Mr. Mark, no deferred stock units; and
Mr. McGregor, 6,800 deferred stock units. |
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Amounts listed reflect the dollar amount recognized for
financial statement reporting purposes for fiscal year 2007 in
accordance with SFAS No. 123R with respect to stock
options, but disregarding for this purpose the estimate of
forfeitures related to service-based vesting conditions. Amounts
include awards granted in and prior to fiscal year 2007. Amounts
for Messrs. Heinen and McGregor represent the incremental
expense associated with a stock option modification, which
consisted of the cancellation of certain outstanding stock
options, the grant of a make-whole stock option award and a cash
payment. The methodology and assumptions used to calculate the
cost of each directors option grants for fiscal year 2007
are described in Note 7 appearing on page 43 of our
Annual Report on
Form 10-K
for the fiscal year ended November 30, 2007. |
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Amounts listed relate to the grant of stock options to the named
directors as follows: |
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Mr. Bycoff was granted an option to purchase
25,000 shares of our common stock with an exercise price of
$31.18 on April 26, 2007. This option was vested and
exercisable on the grant date with respect to 1/60th of the
option, with the balance of the option to be exercisable in
59 monthly installments commencing on May 1, 2007. The
grant date fair value of this option was $274,695.
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Mr. Heinen was granted a fully vested option to purchase
35,500 shares of our common stock with an exercise price of
$31.18 on April 26, 2007. This option was part of a
make-whole award made to Mr. Heinen in connection with the
cancellation of certain of his options to acquire
35,500 shares of our common stock. The grant date fair
value of this option was $390,067, the fair value of the
cancelled options immediately prior to their cancellation was
$353,880 and the associated make-whole cash payment was
$504,517, resulting in an incremental fair value of $540,704 for
the stock option modification.
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Mr. Kane was granted an option to purchase
15,000 shares of our common stock with an exercise price of
$31.18 on April 26, 2007. This option was vested and
exercisable on the grant date with respect to 5/60ths of the
option, with the balance of the option to be exercisable in
55 monthly installments commencing on May 1, 2007. The
grant date fair value of this option was $164,817.
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Mr. Mark was granted a fully vested option to purchase
11,846 shares of our common stock with an exercise price of
$31.18 on April 26, 2007, and a fully vested option to
purchase 11,835 shares of our common stock with an exercise
price of $32.25 on October 15, 2007. The aggregate grant
date fair value of these options was $261,209.
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Mr. McGregor was granted a fully vested option to purchase
81,547 shares of our common stock with an exercise price of
$31.18. This option was part of a make-whole award made to
Mr. McGregor in connection with the cancellation of certain
of his options to acquire 81,547 shares of our common
stock. The grant date fair value of this option was $896,022,
the fair value of the cancelled options immediately prior to
their cancellation was $1,066,283 and the associated make-whole
cash payment was $845,146, resulting in an incremental fair
value of $674,885 for the stock option modification.
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See Discussion of Director Compensation Table below
for further information regarding these stock option grants.
Each director had the following unexercised stock options
outstanding at November 30, 2007: Mr. Bycoff, options
to purchase 25,000 shares of our common stock;
Mr. Heinen, options to purchase 35,500 shares of our
common stock; Mr. Kane, options to purchase
25,000 shares of our common stock; Mr. Mark, options
to purchase 116,931 shares of our common stock; and
Mr. McGregor, options to purchase 81,547 shares of our
common stock.
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(5) |
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Mr. Bycoff was elected to our Board of Directors on
March 7, 2007. |
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(6) |
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Mr. Krall was elected to our Board of Directors on
February 5, 2008. |
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(7) |
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Dr. Rasiel did not stand for re-election at our 2007 annual
meeting of shareholders. Dr. Rasiel serves as Director
Emeritus. |
Discussion
of Director Compensation Table
For fiscal year 2007, the non-employee directors of our company
were paid an annual retainer of $275,000. In addition, the
Chairman of the Board received $25,000 for serving in that
capacity. With respect to service on the committees of the Board
of Directors, the following fees were paid: Audit
Committee $25,000 for the Chairman and $20,000 for
the other members; Compensation Committee $15,000
for the Chairman and $12,500 for the other members; Nominating
and Corporate Governance Committee $10,000 for the
Chairman and $7,500 for the other members; and special
committees (while in use) $30,000 for the Chairman
and $25,000 for the other members. Mr. Alsop receives no
compensation for serving as a director, except that he, like all
directors, is eligible to be reimbursed for expenses incurred in
attending board or committee meetings.
These fees were paid 25% in cash and 75% in equity, either in
the form of fully vested deferred stock units or fully vested
stock options at the election of each director. Each director,
other than Mr. Mark, elected to receive the equity
component of his compensation in the form of deferred stock
units. The number of option shares was determined by dividing
the compensation amount by the grant date Black Scholes value.
The number of deferred stock units was determined by dividing
the compensation amount by the grant date closing price of our
common stock as reported by NASDAQ. The deferred stock units
will be settled for an equivalent number of shares of our common
stock (1) following the date upon which the director ceases
to provide services to our company in that capacity or
(2) upon a change of control of our company, except in the
event that the company is involved in a transaction in which
shares of our common stock will
7
be exchanged for cash or other consideration, in which case the
director will receive cash or other consideration equal in value
to the aggregate number of deferred stock units credited to the
director as of the change of control.
The fiscal year 2007 compensation was paid to our non-employee
directors in two installments, coincident with the April and
October dates upon which we made our broad-based employee equity
grants. Amounts paid were pro-rated for Mr. Bycoff, who was
elected a director on March 7, 2007. Mr. Bycoff also
received an option to acquire 25,000 shares of our common
stock in connection with his appointment to our Board of
Directors. Mr. Kane, who was appointed to the Board on
November 9, 2006, received an option to purchase
10,000 shares of our common stock in fiscal year 2006 and
an option to purchase an additional 15,000 shares of our
common stock in fiscal year 2007, both in connection with such
appointment.
During 2006, it was brought to our attention that our 1997 Stock
Incentive Plan (the 1997 Plan) contained language
that prohibited directors who serve on our Compensation
Committee from receiving any option grants under the 1997 Plan.
It was our position that such language was the result of a
scriveners error and should not have been included in the
1997 Plan. Nevertheless, to satisfy NASDAQ listing requirements,
we obtained shareholder approval to amend the 1997 Plan to
delete this language. We also cancelled all outstanding stock
options granted to members of our Board of Directors while
serving on the Compensation Committee. With respect to options
that had already been exercised, the director agreed to return
to us the shares acquired through option exercise, and we agreed
to refund to the director the exercise price. In instances where
the director already sold the shares, the director agreed to
return to us the net profit from the sale of the shares, less
any taxes paid.
Following shareholder approval of the amendment to the 1997
Plan, we committed to grant make-whole equity awards and cash
payments to Mr. Heinen and Mr. McGregor, the two
directors whose stock options were cancelled. As a result,
Mr. Heinen received an option to purchase
35,500 shares of our common stock and a make-whole cash
payment of $504,517, and Mr. McGregor received an option to
purchase 81,547 shares of our common stock and a make-whole
cash payment of $845,146.
During 2006, we undertook a review of our historical stock
option practices, covering all option grants since the beginning
of our 1996 fiscal year. The review was conducted under the
direction of a Special Committee of independent members of our
Board of Directors, with assistance from counsel, including
special counsel with no prior relationship to us or our
management. In connection with this review, each of our
non-employee directors agreed to voluntarily amend any
below-market option he received to increase the exercise price
of that option. There was no incremental fair value associated
with the grant of these amended stock options under
SFAS No. 123R. To the extent that any below-market
option had already been exercised, each of these directors also
agreed to pay us an amount equal to the bargain element of the
grant (i.e., the amount by which the fair market value exceeded
the exercise price on the measurement date). The payment was
reduced by the amount of any federal and state taxes on the
bargain element already paid or incurred by the director in
connection with such exercise. The payment could be made in the
form of cash, surrender of stock or outstanding stock options
with an equivalent intrinsic value. The following table
provides, for each of these directors, the aggregate value
relinquished as a result of the increased exercise prices, the
aggregate amount of the bargain element attributable to prior
option exercises that was paid to us and the sum of these two
amounts.
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Aggregate Value
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Relinquished in
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Aggregate Payment
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Value Relinquished
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Name
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Repricing
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Amount to Company
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Plus Payment Amount
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Roger J. Heinen, Jr.
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$
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0
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$
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77,458
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$
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77,458
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Michael L. Mark
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75,270
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16,246
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91,516
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Scott A. McGregor
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68,920
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110,603
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179,523
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Amram Rasiel
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0
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62,130
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62,130
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Messrs. Bycoff, Kane and Krall are not included in the
above table because they joined our Board of Directors
subsequent to the commencement of this review and, thus, did not
receive any below-market options.
8
In April 2007, we adopted stock retention guidelines for our
non-employee directors. These guidelines provide for all
non-employee directors to hold at least 10,000 shares of
our common stock
and/or
deferred stock units. Directors have three years to attain this
ownership threshold.
CORPORATE
GOVERNANCE
Independence
of Members of our Board of Directors
Our Board of Directors has determined that each of our
non-employee directors (Messrs. Bycoff, Heinen, Kane,
Krall, Mark, and McGregor) is independent within the meaning of
the director independence standards of NASDAQ and the applicable
rules of the SEC. In making this determination, our Board
solicited information from each of the directors regarding
whether such director, or any member of his immediate family,
had a direct or indirect material interest in any transactions
involving our company, was involved in a debt relationship with
our company or received personal benefits outside the scope of
the directors normal compensation. Our Board considered
the responses of the directors, and independently considered the
commercial agreements, acquisitions and other material
transactions entered into by us during fiscal year 2007, and
determined that none of our non-employee directors had a
material interest in those transactions.
Executive
Sessions of Independent Directors
Executive sessions of the independent directors are held
following regularly scheduled meetings of our Board of
Directors. Executive sessions do not include the employee
director of our company, and the Chairman of the Board is
responsible for chairing the executive sessions.
Policies
Governing Director Nominations
Our Board of Directors delegates the search for, and
recommendation of, director nominees to the Nominating and
Corporate Governance Committee. When considering a potential
candidate for membership on our Board of Directors, the
Nominating and Corporate Governance Committee will consider any
criteria it deems appropriate, including, among other things,
the experience and qualifications of any particular candidate as
well as such candidates past or anticipated contributions
to the Board and its committees. At a minimum, each nominee is
expected to have the highest personal and professional integrity
and demonstrated exceptional ability and judgment, and to be
effective, with the other directors, in collectively serving the
long-term interests of our shareholders. In addition, the
Nominating and Corporate Governance Committee has established
the following minimum requirements:
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at least five years of business experience;
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no identified conflicts of interest as a prospective director of
our company;
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no convictions in a criminal proceeding (aside from traffic
violations) during the five years prior to the date of
selection; and
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willingness to comply with our Code of Conduct and Finance Code
of Professional Ethics.
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The Board retains the right to modify these minimum
qualifications from time to time, and exceptional candidates who
do not meet all of these criteria may still be considered.
The Nominating and Corporate Governance Committee may also
consider other criteria that it deems appropriate from time to
time for the overall composition and structure of our Board, and
intends to seek a board of directors that, as a whole, reflects
a diversity of background, experience, skills, ages, race and
gender.
9
In the case of incumbent directors, the Nominating and Corporate
Governance Committee reviews each such directors overall
past service to us, including the number of meetings attended,
level of participation, quality of performance, and whether the
director continues to meet applicable independence standards. In
the case of a new director candidate, the Nominating and
Corporate Governance Committee determines whether the candidate
meets the applicable independence standards, and the level of
the candidates financial expertise. The candidate will
also be interviewed by the Nominating and Corporate Governance
Committee.
Generally, the Nominating and Corporate Governance Committee
identifies candidates for director nominees in consultation with
management and the other directors through the use of search
firms or other advisors, through recommendations submitted by
shareholders or through such other methods as the Nominating and
Corporate Governance Committee deems to be helpful to identify
candidates. In particular, the Nominating and Corporate
Governance Committee identified Mr. Bycoff during fiscal
year 2007 and Mr. Krall during fiscal year 2008 as
potential director candidates through then current directors.
Once a candidate has been identified, the Nominating and
Corporate Governance Committee confirms that the candidate meets
all of the minimum qualifications for a director nominee
established by the Committee. The Nominating and Corporate
Governance Committee then meets 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. The same procedures apply to all candidates for
director nomination, including candidates submitted by
shareholders. Based on the results of the evaluation process,
the Nominating and Corporate Governance Committee recommends
candidates for the Boards approval as director nominees
for election to our Board of Directors. The Nominating and
Corporate Governance Committee also recommends candidates to the
Board for appointment to its committees.
The Nominating and Corporate Governance Committee will consider
director nominee candidates who are recommended by shareholders
of our company. Recommendations sent by shareholders must
provide the following information:
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the name and address of record of the shareholder;
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a representation that the shareholder is a record holder of our
common stock, or if the shareholder is not a record holder,
evidence of ownership in accordance with
Rule 14a-8(b)(2)
of the Exchange Act;
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the 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 proposed director candidate;
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a description of the qualifications and background of the
proposed director candidate which addresses the minimum
qualifications described above;
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a description of all arrangements or understandings between the
shareholder and the proposed director candidate; and
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any other information regarding the proposed director candidate
that is required to be included in a proxy statement filed under
SEC rules.
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The submission must be accompanied by a written consent of the
individual to be named in our proxy statement as standing for
election if nominated by our Board of Directors and to serve if
elected by the shareholders. Shareholder recommendations of
candidates for election as directors at an annual meeting of
shareholders must be given at least 120 days prior to the
date on which our proxy statement was released to shareholders
in connection with our previous years annual meeting.
Shareholders may recommend director candidates for consideration
by the Nominating and Corporate Governance Committee by sending
a written communication to the Committee at our offices located
at 14 Oak Park, Bedford, Massachusetts 01730,
c/o Secretary.
10
Policy
Governing Shareholder Communications with our Board of
Directors
Our Board of Directors welcomes communications from
shareholders. Any shareholder may communicate either with the
Board of Directors as a whole, or with any individual director,
by sending a written communication addressed to the Board or to
such director at our offices located at 14 Oak Park, Bedford,
Massachusetts 01730, or by submitting an email communication to
board@progress.com. All communications sent to our Board of
Directors will be forwarded to the Board, as a whole, or to the
individual director to whom such communication was addressed.
Policy
Governing Director Attendance at Annual Meetings of
Shareholders
We do not require members of our Board of Directors to attend
the annual meeting of shareholders. Other than
Messrs. Alsop and Mark, no members of our Board attended
the annual meeting of shareholders held in 2007.
Codes of
Conduct
Our Board of Directors has adopted a Finance Code of
Professional Ethics that applies to the Chief Executive Officer,
Chief Financial Officer, Corporate Controller and other
employees of our finance organization and a Code of Conduct that
applies to all of our officers, directors and employees. Copies
of the Code of Conduct and the Finance Code of Professional
Ethics can be found on our website at
http://www.progress.com
under the Corporate Governance page.
Stock
Option Grant Policy
Our Board of Directors has adopted a Stock Option Grant Policy
providing for stock options and other equity awards to be made
on fixed grant dates during the year. A copy of the Stock Option
Grant Policy can be found on our website at
http://www.progress.com
under the Corporate Governance page.
For more corporate governance information, you are invited to
access the Corporate Governance section of our website at
http://www.progress.com.
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
Our philosophy is to reward executives based upon corporate and
individual performance, as well as to provide long-term
incentives for the achievement of future financial and strategic
goals. We emphasize pay-for-performance compensation programs,
which we believe advance both the short and long-term interests
of our shareholders. We use a combination of total target cash
compensation, composed of base salary and an annual cash
incentive compensation program, 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 three other most highly
compensated 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 salaries, cash incentives and
equity incentive compensation. During fiscal year 2007, our
Compensation Committee consisted of two independent members of
our Board of Directors, both with extensive experience in the
industry.
11
Our Compensation Committee has designed our overall executive
compensation program to achieve the following objectives:
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attract and retain talented executives in todays highly
competitive market;
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motivate and reward executives whose knowledge, skills and
performance are critical to our success;
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provide a competitive compensation package that aligns the
interests of our executive officers and shareholders by tying a
significant portion of an executives cash compensation to
the achievement of performance goals; and
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ensure fairness among the executive management team by
recognizing the contributions each executive makes to our
success.
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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. 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 determining whether to adjust the compensation of any one of
our named executive officers, the Compensation Committee takes
into account market compensation levels for each role, the
contributions and performance of each named executive officer,
and any changes in the responsibilities and roles of each named
executive officer.
The Compensation Committee utilizes industry group data and
analysis as provided by two external compensation consultants
hired by the Compensation Committee, Radford Surveys +
Consulting and Buck Consultants, to assist it in making
decisions on total direct compensation for executives and peer
and industry group data to assist it in making decisions on
equity grants. Each firm provided the following studies:
Executive Compensation Pay Review and Equity Burn Rate.
The survey data is comprised of compensation information from
companies in the software industry with revenue ranging from
$0.2 billion to $1.0 billion. There were
55 companies within this criteria. The peer group list is
comprised of 15 other companies in the software industry with
revenue and market capitalization comparable to us. This peer
group list is reviewed on an annual basis to ensure the
companies remain a valid comparison and to account for any
corporate structure changes in the peer groups, such as an
acquisition by another company. The companies in the peer group
for fiscal year 2007 ranged in size on a revenue basis from
approximately $0.1 billion to $1.5 billion with a
median of $0.7 billion as compared to our revenue of
$0.5 billion, and on a market capitalization basis from
approximately $0.2 billion to $8.5 billion with a
median of $1.7 billion as compared to our market
capitalization of $1.1 billion.
The reports prepared by Radford Surveys + Consulting utilized
the survey data from the Radford High Tech Executive Total
Direct Compensation survey to benchmark the various elements of
executive pay and utilized the peer group data for details of
equity practices, in particular stock option burn rates. We
participate in the Radford Surveys + Consulting Executive survey
to benchmark other executives to the marketplace. The materials
from Radford Surveys + Consulting include a comprehensive report
providing details on the benchmark positions used for each
executive as well as analysis on base salary, short term
incentives, total actual cash compensation, total target cash
compensation, total actual direct compensation and total target
direct compensation. The materials prepared by Buck Consultants
used data from the Buck Total Direct Compensation
Survey High Tech Companies to provide a
comprehensive compensation report on the benchmark positions
used for each executive plus analysis on base salary, short-term
incentives, total actual cash compensation, total target cash
compensation, total actual direct compensation and total target
direct compensation.
12
Executive
Compensation Components
Our executive compensation program is primarily composed of
three elements: (1) base salary; (2) incentive
compensation in the form of annual cash bonus awards; and
(3) equity-based long-term incentive compensation in the
form of stock options. Our Compensation Committee has not
adopted a formal policy for allocating between these various
forms of compensation; however, we generally strive to provide
our named executive officers with a balance of short-term and
long-term incentives. In addition, we provide our executives
with benefits that are generally available to our employees,
including medical, dental, group life and disability insurance
and our 401(k) plan. We also have entered into an Employee
Retention and Motivation Agreement with each of our named
executive officers, which provides for payments and benefits
upon a change of control of our company
and/or
certain involuntary terminations of employment thereafter.
Within the context of the overall objectives of our compensation
programs, the Compensation Committee 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 November 30, 2007
based on a number of factors, including:
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our understanding of compensation generally paid by
similarly-situated companies to their executives with similar
roles and responsibilities;
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the roles and responsibilities of our executives; and
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the individual experience and skills of, and expected
contributions from, our executives.
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Our philosophy in designing our executive compensation plan is
to target base salary at or below the
50th percentile,
total cash compensation around the median level of actual cash
compensation and equity awards between the
50th and
75th percentile
as compared to the compensation studies prepared by the outside
compensation firms. In fiscal year 2007, our named executive
officers ranged from 75% to 129% of the
50th percentile
for total target cash compensation and ranged from 26% to 104%
of the
75th percentile
for equity awards in comparison to the survey data. These total
cash compensation levels are only achieved if we perform against
our goals. The Compensation Committee uses between the
50th and
75th percentile
for equity awards in order to reward executive officers for
superior performance and align the interests of the executive
officers with the interests of shareholders by having a
significant portion of their compensation based on increases in
shareholder value.
We discuss each of the primary elements of our executive
compensation program in detail below. While we have identified
particular compensation objectives that each element of
executive compensation serves, our compensation programs are
meant to 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 total target cash compensation ranges,
including base salary, for each of our executive officers in
April. We have historically established base salaries for each
of our executives based on a number of factors, including:
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competition in the marketplace to hire and retain executives;
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the roles and responsibilities of our executives; and
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the data received from outside compensation consulting firms.
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As part of our annual review process in April 2007, our
Compensation Committee adjusted annual base salaries for our
named executive officers, other than Mr. Alsop. In doing
so, with respect to our named executive officers, other than
Mr. Alsop, our Compensation Committee considered the
recommendations of Mr. Alsop in determining appropriate
base salary levels. The Compensation Committee decided to
increase the base salary of
13
each of Messrs. Ireland, Reidy and Robertson by between 1%
and 8%. Mr. Stamens base salary increased 32% due in
part to a change in status from part-time employment. The Board,
based on the recommendation of the Compensation Committee, did
not change Mr. Alsops base salary. These base salary
increases were made by the Compensation Committee based upon a
review of individual, business unit
and/or
departmental contribution and performance by each named
executive officer, and were made in connection with an overall
review of the named executive officers total target cash
compensation for the fiscal year, including both his annual base
salary and target cash bonus amount. Based on their salaries as
of the beginning of the fiscal year and these changes, the named
executive officers were paid the salary amounts for the fiscal
year ended November 30, 2007 as set forth below in the
Summary Compensation Table.
Annual Cash Incentive Program. It is our
philosophy to base a significant portion of an executive
officers total compensation opportunity on performance
incentives. Our named executive officers participate in our
Corporate Executive Bonus Plan, which is intended to provide an
incentive for superior work and to motivate eligible executive
officers toward overall business results, to tie their goals and
interests to those of the company and its shareholders, and to
enable the company to attract and retain highly qualified
executives. This bonus plan is administered by our Compensation
Committee.
Executive officers may receive a bonus payment under the bonus
plan based upon the attainment of performance targets which are
established by the Compensation Committee. These performance
goals are based on our growth strategy as reflected in our
annual operating budget. The Board discussed and reviewed
operating plans with management during board presentations in
September and December. The Compensation Committee reviewed and
discussed performance goals and incentive bonus plan designs
with management during committee meetings in December and
January. In April 2007, our Compensation Committee formally
approved corporate goals under the bonus plan for our named
executive officers based on total revenue and non-GAAP operating
income for our fiscal year ended November 30, 2007.
Forty percent of a named executive officers bonus was
contingent upon the attainment of the performance goal related
to our total revenue and the remaining 60% was contingent upon
the attainment of the performance goal related to our non-GAAP
operating income. A higher percentage of the annual cash
incentive program was allocated to non-GAAP operating income
than to total revenue as there was a desire to align more of the
incentive compensation towards increased profitability. The
Compensation Committee communicated the bonus criteria to the
named executive officers after such criteria were established.
The Compensation Committee may in its discretion adjust bonuses
payable under the bonus plan based on the achievement of
individual performance goals, although no such adjustments
occurred in fiscal year 2007.
The Compensation Committee established a minimum level of total
revenue and a minimum level of non-GAAP operating income for
fiscal year 2007, which minimum level must be achieved for an
executive officer to receive any portion of his target bonus
amount allocated to that performance goal. Once the minimum
threshold has been achieved, the attainment percentage for each
performance goal for an executive officers bonus is a
linear calculation of:
actual amount threshold
amount
target amount threshold amount
For our fiscal year ended November 30, 2007, the total
revenue target was $479 million and the minimum threshold
amount was $399 million. Our total revenue for fiscal year
2007 for bonus purposes was $488 million, resulting in the
payment of 112% of the portion of each named executive
officers bonus allocated to that performance goal. The
difference between the total revenue for bonus purposes of
$488 million and total revenue in our financial statements
of $494 million related to adjustments for translation
differences between actual and budgeted foreign exchange rates
and differences between open software license orders at the
beginning and end of the fiscal year.
14
For our fiscal year ended November 30, 2007, the non-GAAP
operating income target was $108 million and the minimum
threshold amount was $64 million. Our non-GAAP operating
income for fiscal year 2007 for bonus purposes was
$107 million, resulting in the payment of 98% of the
portion of each named executive officers bonus allocated
to that performance goal. The difference between the non-GAAP
operating income for bonus purposes of $107 million and
non-GAAP operating income in our earnings announcements of
$109 million related to adjustments for translation
differences between actual and budgeted foreign exchange rates
and differences between open software license orders at the
beginning and end of the fiscal year.
Non-GAAP operating income differs from GAAP operating income by
excluding amortization of acquired intangibles, stock-based
compensation, impairment of goodwill, and professional services
fees associated with the investigation and shareholder
derivative lawsuits related to the companys historical
stock option grant practices. We use non-GAAP operating income
to make operational and investment decisions because we believe
the costs and expenses that we exclude from GAAP operating
income are not tied to our core operating results. For these
reasons, we also use non-GAAP operating income as a performance
goal.
As part of the annual review process in April, the Compensation
Committee reviewed and approved changes to target incentive
bonuses for each named executive officer, other than
Mr. Alsop. In doing so, our Compensation Committee
considered the recommendations of Mr. Alsop with respect to
each of the other named executive officers. These target
incentive bonus amounts were $210,000 for Mr. Robertson,
$240,000 for Mr. Ireland, $200,000 for Mr. Reidy, and
$161,500 for Mr. Stamen. The Compensation Committee decided
to increase the target incentive bonus of each of
Messrs. Ireland, Reidy and Robertson by between 2% and 12%.
Mr. Stamens target incentive bonus increased 35% due
in part to a change in status from part-time employment. The
Board, based on the recommendation of the Compensation
Committee, did not change Mr. Alsops target incentive
bonus amount of $325,000. These target incentive bonus amounts
represented over 40% of the named executive officers total
target cash compensation. Thus, these targets represented a
significant percentage of our named executive officers
total target cash compensation and varied depending on the
position of the named executive officer, with our Chief
Executive Officer having the greatest percentage of his
compensation tied to the companys targets since he has the
most influence over the success of our company. Based on the
achievement of the performance goals described above, the named
executive officers were paid the bonus amounts set forth below
in the Summary Compensation Table.
Equity Compensation. We also use stock options
to attract, retain, motivate and reward our named executive
officers. Stock option grants are intended to correlate
executive compensation with our long-term success as measured by
our stock price. Stock options are tied to our future success
because options granted have an exercise price equal to the
closing market value at the date of grant and will only provide
value to the extent that the price of our stock increases above
the exercise price. The Compensation Committees 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 the
Compensation Committees understanding and individual
experiences of market practices of similarly-situated companies.
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
performance by our executive officers over several years.
The Compensation Committee utilizes the grant data from the peer
group and the survey data provided by the compensation
consultants to assist them in determining the size of the
overall option pool for our company, as well as the individual
grants to the named executive officers. In fiscal year 2007, our
equity compensation program for executive officers consisted
exclusively of stock options. Our executive officers realize
value on these options only if our stock price increases (which
benefits all shareholders) and only if the executive officers
remain employed with us beyond the date their options vest.
15
The Compensation Committee believes that option grants to
executive officers provide the following benefits:
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Align management interests with shareholder interests by
creating a direct link between compensation and shareholder
return;
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Give management a significant, long-term interest in our
success; and
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Help retain key executives in a competitive market for talent.
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Stock option awards provide our named executive officers with
the right to purchase shares of our common stock at a fixed
exercise price, typically for a period of either ten years, if
awarded prior to 2005, or seven years, if awarded since 2005,
subject to continued employment with our company. Stock options
are earned on the basis of continued service to us and generally
vest in monthly increments over a five-year period versus a
software industry norm of four years.
During 2006, we undertook a review of our historical stock
option practices and related accounting in connection with an
inquiry made by the SEC into our option-granting practices.
Following this review, in February 2007, our Board of Directors
adopted a Stock Option Grant Policy providing for stock options
and other equity awards to be made on fixed grant dates during
the year. Consistent with this Stock Option Grant Policy, our
current practice is to make annual grants of stock options to
our employees, including our named executive officers, in two
equal installments during the fiscal year. As a result, on each
of April 26, 2007 and October 15, 2007, the
Compensation Committee granted a stock option to each of our
named executive officers set forth below in the Grants of
Plan-Based Awards Table based on the factors listed above.
Severance
and Change in Control Benefits
We have entered into an Employee Retention and Motivation
Agreement with each of the named executive officers. Each
agreement provides for certain payments and benefits upon a
change of control of our company
and/or
certain involuntary terminations of employment thereafter. Our
Board of Directors determined that it is in the best interests
of our company and its shareholders to assure that we will have
the continued dedication and objectivity of our key employees,
despite the possibility, threat or occurrence of a change of
control of the company.
In fiscal year 2007, our Board of Directors approved certain
amendments to these agreements after considering the existing
terms and conditions in the agreements and trends in current
practice with similar companies. These amended agreements were
offered to the employees with existing Employee Retention and
Motivation Agreements, including the named executive officers.
Under the amended agreement, upon a change of control, each
executive officers annual cash bonus award will be fixed
and guaranteed at his respective target level. Payment of this
bonus will immediately occur on a pro-rata basis with respect to
the elapsed part of the relevant fiscal year. In addition, upon
a change of control, all outstanding unvested options and
restricted equity of the executive officer will fully
accelerate, unless the acquirer assumes all such options and
restricted equity. Upon involuntary termination of the executive
officer within 12 months following a change of control, all
remaining outstanding options and restricted equity of the
executive officer will automatically become vested, the
executive officer will be entitled to receive a lump sum payment
equal to 15 months of total target compensation, and his
benefits will continue for 15 months.
401(k)
Plan
We currently provide a matching contribution under our 401(k)
plan. All employees who participated in our 401(k) plan received
a discretionary matching contribution for fiscal year 2007,
representing up to 6% of such employees calendar year
compensation, including base salary, commissions and bonus,
depending upon the employees length of service with the
company and the employees contribution level. This
matching contribution
16
was approved by the Compensation Committee. The named executive
officers also received this matching contribution, except that,
due to limitations imposed on 401(k) matching to higher-paid
individuals under Federal tax law, a portion of the
contributions that otherwise would have been received by the
named executive officers were instead paid directly to them in
cash in a manner consistent with other employees subject to the
matching limitations.
Other
Benefits
We believe that establishing competitive benefit packages for
our employees is an important factor in attracting and retaining
highly qualified personnel. The named executive officers are
eligible to participate in all of our health and insurance
plans, in each case on the same basis as other employees. In
addition, our stock purchase plan is available to all employees
other than employees, if any, who hold 5% or more of our common
stock. Mr. Alsop is not allowed to participate in the stock
purchase plan because he holds in excess 5% of our common stock
as defined under the plan.
Tax and
Accounting Implications
Deductibility of Executive
Compensation. Section 162(m) of the Internal
Revenue Code places a limit of $1 million on the amount of
compensation that public companies may deduct in any one year
with respect to certain of their named executive officers.
Certain performance-based compensation approved by shareholders
is not subject to this deduction limit. The Compensation
Committees strategy in this regard is 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
shareholders, even if such arrangements do not always qualify
for full tax deductibility.
Accounting for Stock-Based Compensation. As of
December 1, 2005, we began accounting for stock-based
awards in accordance with the requirements of Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 123 (revised 2004) Share-Based
Payment (SFAS 123R).
COMPENSATION
COMMITTEE REPORT
This report is submitted by the Compensation Committee of the
Board of Directors. The Compensation Committee has reviewed the
Compensation Discussion and Analysis included in this proxy
statement and discussed it with management. Based on such review
and discussions, the Compensation Committee has recommended to
the Board of Directors that the Compensation Discussion and
Analysis be included in this proxy statement.
No portion of this Compensation Committee Report shall be deemed
to be incorporated by reference into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
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.
Respectfully submitted by the Compensation Committee,
Roger J. Heinen, Jr., Chairman
Scott A. McGregor
17
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of our Board of
Directors during fiscal year 2007 were Messrs. Heinen and
McGregor. Neither of these directors is or has ever been an
officer or employee of our company or of any of its
subsidiaries, or had any relationship with us requiring
disclosure in this proxy statement. There are no compensation
committee interlocks amongst any of our directors.
EXECUTIVE
COMPENSATION
Summary
of Executive Compensation
The following table sets forth certain information with respect
to compensation for the fiscal year ended November 30, 2007
earned by our Chief Executive Officer, our Chief Financial
Officer, and our three other most highly compensated executive
officers, referred to collectively as our named executive
officers, as determined in accordance with applicable SEC rules.
Summary
Compensation Table Fiscal Year 2007
|
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|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
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|
|
Change in
|
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|
|
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Pension Value
|
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and
|
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Nonqualified
|
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|
|
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|
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Non-Equity
|
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Deferred
|
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|
|
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|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
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All Other
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
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Awards
|
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Compensation
|
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Earnings
|
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Compensation
|
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Total
|
Name and Principal Position
|
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($)
|
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($)
|
|
($)(1)
|
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($)(1)
|
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($)(2)
|
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($)
|
|
($)(3)
|
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($)
|
|
Joseph W. Alsop
|
|
$
|
350,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1,918,113
|
|
|
$
|
334,750
|
|
|
|
0
|
|
|
$
|
44,476
|
|
|
$
|
2,647,339
|
|
Co-Founder and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
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|
|
|
|
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|
Chief Executive Officer
|
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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Norman R. Robertson
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266,666
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0
|
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|
0
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999,408
|
|
|
|
206,473
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|
|
|
0
|
|
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31,209
|
|
|
|
1,503,756
|
|
Senior Vice President,
|
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|
|
|
|
|
|
|
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|
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|
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|
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|
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|
|
|
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|
Finance and Administration
|
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|
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|
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|
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|
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|
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|
|
|
|
|
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|
and Chief Financial Officer
|
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|
|
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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David G. Ireland
|
|
|
308,333
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,158,099
|
|
|
|
245,490
|
|
|
|
0
|
|
|
|
45,016
|
|
|
|
1,756,938
|
|
Executive Vice President
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Richard D. Reidy
|
|
|
260,830
|
|
|
|
0
|
|
|
|
0
|
|
|
|
854,987
|
|
|
|
200,445
|
|
|
|
0
|
|
|
|
35,734
|
|
|
|
1,351,996
|
|
Executive Vice President
|
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|
|
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|
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|
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Jeffrey P. Stamen
|
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|
213,442
|
|
|
|
0
|
|
|
$
|
115,750
|
|
|
|
523,961
|
|
|
|
148,613
|
|
|
|
0
|
|
|
|
24,013
|
|
|
|
1,025,779
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|
Senior Vice President, Corporate Development and Strategy
|
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(1) |
|
Amounts listed reflect the dollar amount recognized for
financial statement reporting purposes for fiscal year 2007 in
accordance with SFAS No. 123R with respect to restricted
stock awards and stock options, but disregarding for this
purpose the estimate of forfeitures related to service-based
vesting conditions. Amounts include awards granted in and prior
to fiscal year 2007. The methodology and assumptions used to
calculate the cost of each named executive officers
outstanding option grants for fiscal year 2007 are described in
Note 7 appearing on page 43 of our Annual Report on
Form 10-K
for the fiscal year ended November 30, 2007. Amounts listed
also reflect certain options granted to our named executive
officers in December 2006, in connection with the amendment of
certain of their outstanding options due to the internal review
of our historical stock option practices and related accounting.
The table includes the incremental fair value of these awards. |
18
|
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(2) |
|
Amounts listed reflect the amounts earned in fiscal year 2007
under our Corporate Executive Bonus Plan as described in
Compensation Discussion and Analysis in this proxy
statement. Bonus payments were accrued in the year indicated and
paid in the succeeding fiscal year. Thus, the 2007 bonus amounts
were paid in fiscal year 2008. |
|
(3) |
|
Amounts listed in this column include: |
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Company contributions of $13,905 to our 401(k) plan for each of
the named executive officers.
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Payments for the portion of matching contributions to our 401(k)
plan in excess of participation limits imposed on higher-paid
individuals under federal tax laws, as follows: Mr. Alsop,
$26,203; Mr. Robertson, $13,258; Mr. Ireland, $21,381;
Mr. Reidy, $14,605; and Mr. Stamen, $6,263.
|
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|
Imputed income of long-term disability insurance premiums for
the benefit of the named executive officers as follows:
Mr. Alsop, $1,365; Mr. Robertson, $1,043;
Mr. Ireland, $1,203; Mr. Reidy, $1,017; and
Mr. Stamen, $842.
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|
Imputed income of term life insurance premiums for the benefit
of the named executive officers as follows: Mr. Alsop,
$3,003; Mr. Robertson, $3,003; Mr. Ireland, $3,003;
Mr. Reidy, $683; and Mr. Stamen, $3,003.
|
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Imputed income of $5,524 for each of Messrs. Ireland and
Reidy for costs associated with a sales incentive event.
|
Grants of
Plan-Based Awards
The following table sets forth certain information with respect
to grants of plan-based awards for the fiscal year ended
November 30, 2007 to the named executive officers. Option
grants to each named executive officer were made pursuant to our
1997 Plan.
GRANTS OF
PLAN-BASED AWARDS TABLE FISCAL YEAR 2007
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All
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All
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Other
|
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Other
|
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Stock
|
|
Option
|
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|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
Date Fair
|
|
|
|
|
Estimated Possible Payouts
|
|
Number
|
|
Number of
|
|
or Base
|
|
Value of
|
|
|
|
|
Under Non-Equity
|
|
of Shares
|
|
Securities
|
|
Price of
|
|
Stock and
|
|
|
|
|
Incentive Plan Awards(2)
|
|
of Stock
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
or Units
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Date(1)
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
($/Sh)(3)
|
|
($)(4)
|
|
Joseph W. Alsop
|
|
|
|
|
|
|
0
|
|
|
$
|
325,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,000
|
(5)
|
|
$
|
5.29
|
|
|
$
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
240,000
|
(6)
|
|
|
10.58
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(7)
|
|
|
16.19
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,000
|
(8)
|
|
|
13.88
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(9)
|
|
|
23.00
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
(10)
|
|
|
14.94
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(7)
|
|
|
16.19
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
(11)
|
|
|
14.30
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
(12)
|
|
|
17.42
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
(13)
|
|
|
13.50
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
(14)
|
|
|
16.99
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
(15)
|
|
|
18.75
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
(16)
|
|
|
21.45
|
|
|
|
0
|
|
|
|
|
04/26/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,750
|
(17)
|
|
|
31.18
|
|
|
|
1,052,082
|
|
|
|
|
10/15/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,750
|
(18)
|
|
|
32.25
|
|
|
|
1,060,230
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
Date Fair
|
|
|
|
|
Estimated Possible Payouts
|
|
Number
|
|
Number of
|
|
or Base
|
|
Value of
|
|
|
|
|
Under Non-Equity
|
|
of Shares
|
|
Securities
|
|
Price of
|
|
Stock and
|
|
|
|
|
Incentive Plan Awards(2)
|
|
of Stock
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
or Units
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Date(1)
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
($/Sh)(3)
|
|
($)(4)
|
|
Norman R. Robertson
|
|
|
|
|
|
|
0
|
|
|
|
210,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(9)
|
|
|
23.00
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(11)
|
|
|
14.30
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,440
|
(13)
|
|
|
13.50
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(14)
|
|
|
16.99
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
(15)
|
|
|
18.75
|
|
|
|
0
|
|
|
|
|
12/18/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
(16)
|
|
|
21.45
|
|
|
|
0
|
|
|
|
|
04/26/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(19)
|
|
|
31.18
|
|
|
|
219,756
|
|
|
|
|
10/15/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(20)
|
|
|
32.25
|
|
|
|
221,458
|
|
David G. Ireland
|
|
|
|
|
|
|
0
|
|
|
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
(9)
|
|
|
23.00
|
|
|
|
1,600
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,000
|
(9)
|
|
|
19.25
|
|
|
|
0
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,650
|
(11)
|
|
|
14.30
|
|
|
|
584
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
(12)
|
|
|
17.42
|
|
|
|
2,700
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,950
|
(13)
|
|
|
13.50
|
|
|
|
1,438
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,687
|
(13)
|
|
|
13.50
|
|
|
|
107
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,513
|
(13)
|
|
|
13.24
|
|
|
|
0
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,500
|
(14)
|
|
|
16.99
|
|
|
|
21,850
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,250
|
(14)
|
|
|
15.07
|
|
|
|
0
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,667
|
(15)
|
|
|
18.75
|
|
|
|
8,333
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,333
|
(15)
|
|
|
18.15
|
|
|
|
0
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,667
|
(16)
|
|
|
21.45
|
|
|
|
35,417
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,333
|
(16)
|
|
|
19.25
|
|
|
|
0
|
|
|
|
|
04/26/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(19)
|
|
|
31.18
|
|
|
|
219,756
|
|
|
|
|
10/15/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(20)
|
|
|
32.25
|
|
|
|
221,458
|
|
Richard D. Reidy
|
|
|
|
|
|
|
0
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,413
|
(21)
|
|
|
13.88
|
|
|
|
1,262
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
833
|
(9)
|
|
|
23.00
|
|
|
|
666
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,167
|
(9)
|
|
|
19.25
|
|
|
|
0
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,667
|
(11)
|
|
|
14.30
|
|
|
|
1,867
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,333
|
(11)
|
|
|
12.81
|
|
|
|
0
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,667
|
(12)
|
|
|
17.42
|
|
|
|
8,400
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,333
|
(12)
|
|
|
13.08
|
|
|
|
0
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,333
|
(13)
|
|
|
13.50
|
|
|
|
1,733
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,667
|
(13)
|
|
|
13.24
|
|
|
|
0
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,667
|
(14)
|
|
|
16.99
|
|
|
|
14,567
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,333
|
(14)
|
|
|
15.07
|
|
|
|
0
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,167
|
(15)
|
|
|
18.75
|
|
|
|
5,833
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,833
|
(15)
|
|
|
18.15
|
|
|
|
0
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,166
|
(16)
|
|
|
21.45
|
|
|
|
24,791
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,834
|
(16)
|
|
|
19.25
|
|
|
|
0
|
|
|
|
|
04/26/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(19)
|
|
|
31.18
|
|
|
|
164,817
|
|
|
|
|
10/15/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(20)
|
|
|
32.25
|
|
|
|
166,094
|
|
Jeffery P. Stamen
|
|
|
|
|
|
|
0
|
|
|
|
161,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/22/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(22)
|
|
|
21.45
|
|
|
|
41,500
|
|
|
|
|
04/26/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(19)
|
|
|
31.18
|
|
|
|
137,348
|
|
|
|
|
10/15/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(20)
|
|
|
32.25
|
|
|
|
138,411
|
|
20
|
|
|
(1) |
|
Each option grant made to the named executive officers in
December 2006 relates to the amendment of an outstanding option
in connection with the internal review of our historical stock
option practices and related accounting. Such amendments were
undertaken to increase the exercise prices of these options to
an amount equal to the fair market value of our common stock on
the measurement dates of such options for accounting and tax
purposes. Each such amendment resulted in the deemed
cancellation of the original option and the deemed grant of a
replacement option. See below for further information. |
|
(2) |
|
These columns indicate the range of payouts targeted for fiscal
year 2007 performance under our Corporate Executive Bonus Plan
as described in Compensation Discussion and Analysis
earlier in this proxy statement. The actual payout with respect
to fiscal year 2007 for each named executive officer is shown in
the Summary Compensation Table in the column titled
Non-Equity Incentive Plan Compensation. There is no
maximum payout under the bonus plan. |
|
(3) |
|
All options were granted with exercise prices equal to the fair
market value of our common stock on the date of grant. |
|
(4) |
|
The methodology and assumptions used to calculate the grant date
fair value of the options granted to each named executive
officer during fiscal year 2007 are described in Note 7
appearing on page 43 of our Annual Report on
Form 10-K
for the fiscal year ended November 30, 2007, but
disregarding for this purpose the estimate of forfeitures
related to service-based vesting conditions. Each option grant
made to the named executive officers in December 2006 was
accounted for as a stock option modification under
SFAS 123R, as described in Note 7 appearing on
page 43 of our Annual Report on
Form 10-K
for the fiscal year ended November 30, 2007. The grant date
fair value for such grants represents only the incremental fair
value that resulted from the modification. |
|
(5) |
|
This option was originally granted on March 3, 1997 and
vests 1/60ths on the date of grant, with the remainder vesting
in monthly increments commencing on April 1, 1997. |
|
(6) |
|
This option was originally granted on February 3, 1998 and
vests in 60 monthly increments commencing on March 1,
1998. |
|
(7) |
|
This option was originally granted on September 1, 1998 and
vests 7/60ths on the date of grant, with the remainder vesting
in 53 monthly increments commencing on October 1, 1998. |
|
(8) |
|
This option was originally granted on May 17, 1999 and
vests 3/60ths on the date of grant, with the remainder vesting
in 57 monthly increments commencing on June 1, 1999. |
|
(9) |
|
This option was originally granted on February 18, 2000 and
vests in 60 monthly increments commencing on March 1,
2000. |
|
(10) |
|
This option was originally granted on October 6, 2000 and
vests 8/60ths on the date of grant, with the remainder vesting
in 52 monthly increments commencing on November 1,
2000. |
|
(11) |
|
This option was originally granted on April 3, 2001 and
vests 2/60ths on the date of grant, with the remainder vesting
in 58 monthly increments commencing on May 1, 2001. |
|
(12) |
|
This option was originally granted on October 10, 2001 and
vests 8/60ths on the date of grant, with the remainder vesting
in 52 monthly increments commencing on November 1,
2001. |
|
(13) |
|
This option was originally granted on August 2, 2002 and
vests 6/60ths on the date of grant, with the remainder vesting
in 54 monthly increments commencing on September 1,
2002. |
|
(14) |
|
This option was originally granted on February 24, 2003 and
vests in 60 monthly increments commencing on March 1,
2003. |
|
(15) |
|
This option was originally granted on May 24, 2004 and
vests 3/60ths on the date of grant, with the remainder vesting
in 57 monthly increments commencing on June 1, 2004. |
21
|
|
|
(16) |
|
This option was originally granted on September 27, 2004
and vests 7/60ths on the date of grant, with the remainder
vesting in 53 monthly increments commencing on
October 1, 2004. |
|
(17) |
|
Two options were granted to Mr. Alsop on this date. The
first option to purchase 30,000 shares vests 26/60ths on
the date of grant, with the remainder vesting in 34 monthly
increments commencing on May 1, 2007. The second option to
purchase 65,750 shares vests 2/60ths on the date of grant,
with the remainder vesting in 58 monthly increments
commencing on May 1, 2007. |
|
(18) |
|
Two options were granted to Mr. Alsop on this date. The
first option to purchase 30,000 shares vests 32/60ths on
the date of grant, with the remainder vesting in 28 monthly
increments commencing on November 1, 2007. The second
option to purchase 65,750 shares vests 8/60ths on the date
of grant, with the remainder vesting in 52 monthly
increments commencing on November 1, 2007. |
|
(19) |
|
This option vests 2/60ths on the date of grant, with the
remainder vesting in 58 monthly increments commencing on
May 1, 2007. |
|
(20) |
|
This option vests 8/60ths on the date of grant, with the
remainder vesting in 52 monthly increments commencing on
November 1, 2007. |
|
(21) |
|
This option was originally granted on May 17, 1999 and
vested as to 1,100 shares on January 17, 1999, vests
in monthly increments from December 1, 1999 to
March 1, 2009, and vests as to 292 shares on
April 1, 2009. |
|
(22) |
|
This option was originally granted on September 27, 2004
and vests in 54 monthly increments commencing on
January 1, 2005. |
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 Grants of Plan-Based Awards Table was paid or
awarded, are described above under Administration and
Objectives of our Executive Compensation Program and
Executive Compensation Components within the
Compensation Discussion and Analysis. A description
of the application of those policies and practices to each of
the named executive officers for the fiscal year ended November
30, 2007 is included above under the heading Executive
Compensation Components within the Compensation
Discussion and Analysis.
The terms of the stock options granted in calendar year 2007 to
our named executive officers were consistent with the vesting
schedules and expiration dates of the majority of the options
granted to employees during the year, except that the stock
options listed in the Grants of Plan-Based Awards Table also
include options to purchase 60,000 shares related to
Mr. Alsops annual option award for fiscal year 2005.
The stock option grant to Mr. Alsop for fiscal 2005 was
deferred due to an insufficient number of shares being available
for grant under our 1997 Stock Incentive Plan. Following the
approval by our shareholders of an increase in the number of
shares authorized for issuance under the 1997 Plan, our
Compensation Committee subsequently made a grant to
Mr. Alsop related to one-half of his award for fiscal year
2005, with the remaining portion of the grant (consisting of
options to purchase an additional 60,000 shares) to be made
in fiscal year 2007. The grants related to fiscal year 2005 will
vest as if they had been granted as originally scheduled in
2005. Stock options to acquire a total of 1,495,000 shares
of our common stock were granted to our employees in fiscal year
2007.
In connection with our review of our historical stock option
practices in 2006, a Special Committee of our Board of Directors
concluded that there was no evidence to indicate that the
practices that caused errors related to stock option grant
measurement dates and stock-based compensation resulted from
willful misconduct, but the Special Committee also concluded
that it would be inappropriate for certain employees who
participated in, or knew or should have known of, such
practices, to retain the benefit arising from the below-market
nature of the option grants. These employees included
Mr. Alsop and Mr. Robertson, each of whom agreed that
all outstanding options to purchase our common stock issued to
him during such periods would be amended to increase the
exercise prices to an amount equal to the fair market value of
our common stock on the measurement dates of such options for
accounting purposes. To the extent that any below-market option
had already been exercised, each of these
22
named executive officers also agreed to pay us an amount equal
to the bargain element of the grant (i.e., the amount by which
the fair market value exceeded the exercise price on the
measurement date). The payment was reduced by the amount of any
federal and state taxes on the bargain element already paid or
incurred by the named executive officer in connection with such
exercise. The payment could be made in the form of cash,
surrender of stock or outstanding stock options with an
equivalent intrinsic value.
The following table provides, for each of these named executive
officers, the aggregate value relinquished as a result of the
increased exercise prices, the aggregate amount of the bargain
element attributable to prior option exercises that was paid to
us and the sum of these two amounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Value
|
|
|
|
|
|
|
Relinquished in
|
|
Aggregate Payment
|
|
Value Relinquished
|
Name
|
|
Repricing
|
|
Amount to Company
|
|
Plus Payment Amount
|
|
Joseph W. Alsop
|
|
$
|
5,040,530
|
|
|
$
|
77,707
|
|
|
$
|
5,118,237
|
|
Norman R. Robertson
|
|
|
377,214
|
|
|
|
264,004
|
|
|
|
641,218
|
|
In addition, to the extent that any options with exercise prices
below the fair market value of our common stock on the actual
date of grant were to vest subsequent to December 2004, holders
of the options could have been deemed to have received
nonqualified deferred compensation for purposes of
Section 409A of the Internal Revenue Code, and could have
been subject to an excise tax on the value of the options in the
year in which they vest. We agreed with each of
Messrs. Ireland, Reidy and Stamen to amend his affected
options to increase the exercise price to the fair market value
of our common stock on the revised grant date, and to make a
cash payment to him to compensate for the increase in the
exercise price, payable in up to five installments in 2008 and
2009. The following table provides, for each of these named
executive officers, the aggregate increase in the exercise
prices of his amended options and the maximum aggregate amount
of the cash payment to him in consideration of such increase.
|
|
|
|
|
|
|
|
|
|
|
Aggregate Increase
|
|
|
Maximum Aggregate
|
|
Name
|
|
in Exercise Price
|
|
|
Cash Payment
|
|
|
David G. Ireland
|
|
$
|
247,127
|
|
|
$
|
247,127
|
|
Richard D. Reidy
|
|
|
253,563
|
|
|
|
253,563
|
|
Jeffrey P. Stamen
|
|
|
110,000
|
|
|
|
110,000
|
|
23
Outstanding
Equity Awards
The following table sets forth certain information with respect
to the outstanding equity awards at November 30, 2007 for
each of the named executive officers.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
Number of Securities
|
|
Underlying
|
|
Option
|
|
|
|
|
Underlying
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
|
Unexercised Options (#)
|
|
Unearned
|
|
Price
|
|
Expiration
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
($)
|
|
Date
|
|
Joseph W. Alsop
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
247,200
|
|
|
|
0
|
|
|
|
|
|
|
$
|
12.81
|
|
|
|
02/10/2009
|
(1)
|
|
|
|
800
|
|
|
|
0
|
|
|
|
|
|
|
$
|
12.81
|
|
|
|
02/10/2009
|
(1)
|
|
|
|
118,750
|
|
|
|
6,250
|
|
|
|
|
|
|
$
|
21.86
|
|
|
|
11/10/2013
|
(2)
|
|
|
|
21,000
|
|
|
|
39,000
|
|
|
|
|
|
|
$
|
23.07
|
|
|
|
05/21/2013
|
(3)
|
|
|
|
16,500
|
|
|
|
13,500
|
|
|
|
|
|
|
$
|
23.07
|
|
|
|
05/21/2013
|
(4)
|
|
|
|
21,000
|
|
|
|
39,000
|
|
|
|
|
|
|
$
|
25.01
|
|
|
|
09/19/2013
|
(5)
|
|
|
|
16,500
|
|
|
|
13,500
|
|
|
|
|
|
|
$
|
25.01
|
|
|
|
09/19/2013
|
(6)
|
|
|
|
62,200
|
|
|
|
0
|
|
|
|
|
|
|
$
|
16.19
|
|
|
|
09/01/2008
|
(7)
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
|
|
|
$
|
16.19
|
|
|
|
09/01/2008
|
(7)
|
|
|
|
62,000
|
|
|
|
0
|
|
|
|
|
|
|
$
|
13.88
|
|
|
|
05/17/2009
|
(8)
|
|
|
|
10,200
|
|
|
|
0
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
02/18/2010
|
(9)
|
|
|
|
89,800
|
|
|
|
0
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
02/18/2010
|
(9)
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
|
|
|
$
|
14.94
|
|
|
|
10/06/2010
|
(10)
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
|
|
|
$
|
14.30
|
|
|
|
04/02/2011
|
(11)
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
|
|
|
$
|
14.30
|
|
|
|
04/02/2011
|
(11)
|
|
|
|
75,000
|
|
|
|
0
|
|
|
|
|
|
|
$
|
17.42
|
|
|
|
10/09/2011
|
(12)
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
|
|
|
$
|
17.42
|
|
|
|
10/09/2011
|
(12)
|
|
|
|
229,000
|
|
|
|
0
|
|
|
|
|
|
|
$
|
13.50
|
|
|
|
08/01/2012
|
(13)
|
|
|
|
21,000
|
|
|
|
0
|
|
|
|
|
|
|
$
|
13.50
|
|
|
|
08/01/2012
|
(13)
|
|
|
|
118,750
|
|
|
|
6,250
|
|
|
|
|
|
|
$
|
16.99
|
|
|
|
02/23/2013
|
(14)
|
|
|
|
56,250
|
|
|
|
18,750
|
|
|
|
|
|
|
$
|
18.75
|
|
|
|
05/23/2014
|
(15)
|
|
|
|
93,375
|
|
|
|
31,125
|
|
|
|
|
|
|
$
|
21.45
|
|
|
|
09/26/2014
|
(16)
|
|
|
|
375
|
|
|
|
125
|
|
|
|
|
|
|
$
|
21.45
|
|
|
|
09/26/2014
|
(16)
|
|
|
|
9,863
|
|
|
|
55,887
|
|
|
|
|
|
|
$
|
31.18
|
|
|
|
04/25/2014
|
(17)
|
|
|
|
16,500
|
|
|
|
13,500
|
|
|
|
|
|
|
$
|
31.18
|
|
|
|
04/25/2014
|
(18)
|
|
|
|
2,250
|
|
|
|
12,750
|
|
|
|
|
|
|
$
|
32.25
|
|
|
|
10/15/2014
|
(19)
|
|
|
|
7,613
|
|
|
|
43,137
|
|
|
|
|
|
|
$
|
32.25
|
|
|
|
10/15/2014
|
(19)
|
|
|
|
16,500
|
|
|
|
13,500
|
|
|
|
|
|
|
$
|
32.25
|
|
|
|
10/15/2014
|
(20)
|
Norman R. Robertson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,500
|
|
|
|
2,500
|
|
|
|
|
|
|
$
|
21.86
|
|
|
|
11/10/2013
|
(2)
|
|
|
|
13,200
|
|
|
|
10,800
|
|
|
|
|
|
|
$
|
30.81
|
|
|
|
11/14/2012
|
(21)
|
|
|
|
8,800
|
|
|
|
7,200
|
|
|
|
|
|
|
$
|
30.81
|
|
|
|
11/14/2012
|
(21)
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
Number of Securities
|
|
Underlying
|
|
Option
|
|
|
|
|
Underlying
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
|
Unexercised Options (#)
|
|
Unearned
|
|
Price
|
|
Expiration
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
($)
|
|
Date
|
|
|
|
|
8,750
|
|
|
|
16,250
|
|
|
|
|
|
|
$
|
23.07
|
|
|
|
05/21/2013
|
(3)
|
|
|
|
8,750
|
|
|
|
16,250
|
|
|
|
|
|
|
$
|
25.01
|
|
|
|
09/19/2013
|
(5)
|
|
|
|
25,500
|
|
|
|
0
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
02/18/2010
|
(9)
|
|
|
|
14,500
|
|
|
|
0
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
02/18/2010
|
(9)
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
|
|
|
$
|
14.30
|
|
|
|
04/02/2011
|
(11)
|
|
|
|
47,500
|
|
|
|
2,500
|
|
|
|
|
|
|
$
|
16.99
|
|
|
|
02/23/2013
|
(14)
|
|
|
|
26,250
|
|
|
|
8,750
|
|
|
|
|
|
|
$
|
18.75
|
|
|
|
05/23/2014
|
(15)
|
|
|
|
26,250
|
|
|
|
8,750
|
|
|
|
|
|
|
$
|
21.45
|
|
|
|
09/26/2014
|
(16)
|
|
|
|
3,000
|
|
|
|
17,000
|
|
|
|
|
|
|
$
|
31.18
|
|
|
|
04/25/2014
|
(17)
|
|
|
|
3,000
|
|
|
|
17,000
|
|
|
|
|
|
|
$
|
32.25
|
|
|
|
10/15/2014
|
(19)
|
David G. Ireland
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,250
|
|
|
|
3,750
|
|
|
|
|
|
|
$
|
21.86
|
|
|
|
11/10/2013
|
(2)
|
|
|
|
29,700
|
|
|
|
24,300
|
|
|
|
|
|
|
$
|
30.81
|
|
|
|
11/14/2012
|
(21)
|
|
|
|
10,500
|
|
|
|
19,500
|
|
|
|
|
|
|
$
|
23.07
|
|
|
|
05/21/2013
|
(3)
|
|
|
|
10,500
|
|
|
|
19,500
|
|
|
|
|
|
|
$
|
25.01
|
|
|
|
09/19/2013
|
(5)
|
|
|
|
58,000
|
|
|
|
0
|
|
|
|
|
|
|
$
|
19.25
|
|
|
|
02/18/2010
|
(9)
|
|
|
|
2,000
|
|
|
|
0
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
02/18/2010
|
(9)
|
|
|
|
3,750
|
|
|
|
0
|
|
|
|
|
|
|
$
|
17.42
|
|
|
|
10/09/2011
|
(12)
|
|
|
|
13,750
|
|
|
|
3,750
|
|
|
|
|
|
|
$
|
16.99
|
|
|
|
02/23/2013
|
(14)
|
|
|
|
8,333
|
|
|
|
0
|
|
|
|
|
|
|
$
|
18.15
|
|
|
|
05/23/2014
|
(15)
|
|
|
|
29,167
|
|
|
|
12,500
|
|
|
|
|
|
|
$
|
18.75
|
|
|
|
05/23/2014
|
(15)
|
|
|
|
8,333
|
|
|
|
0
|
|
|
|
|
|
|
$
|
19.25
|
|
|
|
09/26/2014
|
(16)
|
|
|
|
29,167
|
|
|
|
12,500
|
|
|
|
|
|
|
$
|
21.45
|
|
|
|
09/26/2014
|
(16)
|
|
|
|
3,000
|
|
|
|
17,000
|
|
|
|
|
|
|
$
|
31.18
|
|
|
|
04/25/2014
|
(17)
|
|
|
|
3,000
|
|
|
|
17,000
|
|
|
|
|
|
|
$
|
32.25
|
|
|
|
10/15/2014
|
(19)
|
Richard D. Reidy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87
|
|
|
|
899
|
|
|
|
|
|
|
$
|
12.81
|
|
|
|
02/10/2009
|
(22)
|
|
|
|
47,500
|
|
|
|
2,500
|
|
|
|
|
|
|
$
|
21.86
|
|
|
|
11/10/2013
|
(2)
|
|
|
|
15,950
|
|
|
|
13,050
|
|
|
|
|
|
|
$
|
30.81
|
|
|
|
11/14/2012
|
(21)
|
|
|
|
6,050
|
|
|
|
4,950
|
|
|
|
|
|
|
$
|
30.81
|
|
|
|
11/14/2012
|
(21)
|
|
|
|
7,000
|
|
|
|
13,000
|
|
|
|
|
|
|
$
|
23.07
|
|
|
|
05/21/2013
|
(3)
|
|
|
|
7,000
|
|
|
|
13,000
|
|
|
|
|
|
|
$
|
25.01
|
|
|
|
09/19/2013
|
(5)
|
|
|
|
5,287
|
|
|
|
3,126
|
|
|
|
|
|
|
$
|
13.88
|
|
|
|
05/17/2009
|
(23)
|
|
|
|
17,110
|
|
|
|
0
|
|
|
|
|
|
|
$
|
19.25
|
|
|
|
02/18/2010
|
(9)
|
|
|
|
590
|
|
|
|
0
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
02/18/2010
|
(9)
|
|
|
|
7,057
|
|
|
|
0
|
|
|
|
|
|
|
$
|
19.25
|
|
|
|
02/18/2010
|
(9)
|
|
|
|
243
|
|
|
|
0
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
02/18/2010
|
(9)
|
|
|
|
12,768
|
|
|
|
0
|
|
|
|
|
|
|
$
|
12.81
|
|
|
|
04/02/2011
|
(11)
|
|
|
|
11,667
|
|
|
|
0
|
|
|
|
|
|
|
$
|
14.30
|
|
|
|
04/02/2011
|
(11)
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
Number of Securities
|
|
Underlying
|
|
Option
|
|
|
|
|
Underlying
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
|
Unexercised Options (#)
|
|
Unearned
|
|
Price
|
|
Expiration
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
($)
|
|
Date
|
|
|
|
|
38,333
|
|
|
|
0
|
|
|
|
|
|
|
$
|
13.08
|
|
|
|
10/09/2011
|
(12)
|
|
|
|
11,667
|
|
|
|
0
|
|
|
|
|
|
|
$
|
17.42
|
|
|
|
10/09/2011
|
(12)
|
|
|
|
50,320
|
|
|
|
0
|
|
|
|
|
|
|
$
|
13.24
|
|
|
|
08/01/2012
|
(13)
|
|
|
|
38,480
|
|
|
|
0
|
|
|
|
|
|
|
$
|
13.50
|
|
|
|
08/01/2012
|
(13)
|
|
|
|
6,347
|
|
|
|
0
|
|
|
|
|
|
|
$
|
13.24
|
|
|
|
08/01/2012
|
(13)
|
|
|
|
4,853
|
|
|
|
0
|
|
|
|
|
|
|
$
|
13.50
|
|
|
|
08/01/2012
|
(13)
|
|
|
|
18,333
|
|
|
|
0
|
|
|
|
|
|
|
$
|
15.07
|
|
|
|
02/23/2013
|
(14)
|
|
|
|
29,167
|
|
|
|
2,500
|
|
|
|
|
|
|
$
|
16.99
|
|
|
|
12/23/2013
|
(14)
|
|
|
|
5,833
|
|
|
|
0
|
|
|
|
|
|
|
$
|
18.15
|
|
|
|
05/23/2014
|
(15)
|
|
|
|
20,417
|
|
|
|
8,750
|
|
|
|
|
|
|
$
|
18.75
|
|
|
|
05/23/2014
|
(15)
|
|
|
|
5,834
|
|
|
|
0
|
|
|
|
|
|
|
$
|
19.25
|
|
|
|
09/26/2014
|
(16)
|
|
|
|
20,416
|
|
|
|
8,750
|
|
|
|
|
|
|
$
|
21.45
|
|
|
|
09/26/2014
|
(16)
|
|
|
|
1,501
|
|
|
|
8,499
|
|
|
|
|
|
|
$
|
31.18
|
|
|
|
04/25/2014
|
(17)
|
|
|
|
750
|
|
|
|
4,250
|
|
|
|
|
|
|
$
|
31.18
|
|
|
|
04/25/2014
|
(17)
|
|
|
|
2,250
|
|
|
|
12,750
|
|
|
|
|
|
|
$
|
32.25
|
|
|
|
10/15/2014
|
(19)
|
Jeffrey P. Stamen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,407
|
|
|
|
17,593
|
|
|
|
|
|
|
$
|
19,31
|
|
|
|
07/08/2014
|
(24)
|
|
|
|
13,200
|
|
|
|
10,800
|
|
|
|
|
|
|
$
|
30.81
|
|
|
|
11/14/2012
|
(21)
|
|
|
|
8,800
|
|
|
|
7,200
|
|
|
|
|
|
|
$
|
30.81
|
|
|
|
11/14/2012
|
(21)
|
|
|
|
2,625
|
|
|
|
4,875
|
|
|
|
|
|
|
$
|
23.07
|
|
|
|
05/21/2013
|
(3)
|
|
|
|
2,625
|
|
|
|
4,875
|
|
|
|
|
|
|
$
|
25.01
|
|
|
|
09/19/2013
|
(5)
|
|
|
|
32,407
|
|
|
|
17,593
|
|
|
|
|
|
|
$
|
21.45
|
|
|
|
09/26/2014
|
(25)
|
|
|
|
1,875
|
|
|
|
10,625
|
|
|
|
|
|
|
$
|
31.18
|
|
|
|
04/25/2014
|
(17)
|
|
|
|
1,875
|
|
|
|
10,625
|
|
|
|
|
|
|
$
|
32.25
|
|
|
|
10/15/2014
|
(19)
|
|
|
|
(1) |
|
This option vests in 60 monthly increments commencing on
March 1, 1999. |
|
(2) |
|
This option vests 9/60ths on the date of grant, with the
remainder vesting in 51 monthly increments commencing on
December 1, 2003. |
|
(3) |
|
This option vests 3/60ths on the date of grant, with the
remainder vesting in 57 monthly increments commencing on
June 1, 2006. |
|
(4) |
|
This option vests 15/60ths on the date of grant, with the
remainder vesting in 45 monthly increments commencing on
June 1, 2006. |
|
(5) |
|
This option vests 7/60ths on the date of grant, with the
remainder vesting in 53 monthly increments commencing on
October 1, 2006. |
|
(6) |
|
This option vests 19/60ths on the date of grant, with the
remainder vesting in 41 monthly increments commencing on
October 1, 2006. |
|
(7) |
|
This option was originally granted on September 1, 1998 and
vests 7/60ths on the date of grant, with the remainder vesting
in 53 monthly increments commencing on October 1, 1998. |
26
|
|
|
(8) |
|
This option was originally granted on May 17, 1999 and
vests 3/60ths on the date of grant, with the remainder vesting
in 57 monthly increments commencing on June 1,1999. |
|
(9) |
|
This option was originally granted on February 18, 2000 and
vests in 60 monthly increments commencing on March 1,
2000. |
|
(10) |
|
This option was originally granted on October 6, 2000 and
vests 8/60ths on the date of grant, with the remainder vesting
in 52 monthly increments commencing on November 1,
2000. |
|
(11) |
|
This option was originally granted on April 3, 2001 and
vests 2/60ths on the date of grant, with the remainder vesting
in 58 monthly increments commencing on May 1, 2001. |
|
(12) |
|
This option was originally granted on October 10, 2001 and
vests 8/60ths on the date of grant, with the remainder vesting
in 52 monthly increments commencing on November 1,
2001. |
|
(13) |
|
This option was originally granted on August 2, 2002 and
vests 6/60ths on the date of grant, with the remainder vesting
in 54 monthly increments commencing on September 1,
2002. |
|
(14) |
|
This option was originally granted on February 24, 2003 and
vests in 60 monthly increments commencing on March 1,
2003. |
|
(15) |
|
This option was originally granted on May 24, 2004 and
vests 3/60ths on the date of grant, with the remainder vesting
in 57 monthly increments commencing on June 1, 2004. |
|
(16) |
|
This option was originally granted on September 27, 2004
and vests 7/60ths on the date of grant, with the remainder
vesting in 53 monthly increments commencing on
October 1, 2004. |
|
(17) |
|
This option vests 2/60ths on the date of grant, with the
remainder vesting in 58 monthly increments commencing on
May 1, 2007. |
|
(18) |
|
This option vests 26/60ths on the date of grant, with the
remainder vesting in 34 monthly increments commencing on
May 1, 2007. |
|
(19) |
|
This option vests 8/60ths on the date of grant, with the
remainder vesting in 52 monthly increments commencing on
November 1, 2007. |
|
(20) |
|
This option vests 32/60ths on the date of grant, with the
remainder vesting in 28 monthly increments commencing on
November 1, 2007. |
|
(21) |
|
This option vests 9/60ths on the date of grant, with the
remainder vesting in 51 monthly increments commencing on
December 1, 2005. |
|
(22) |
|
This option vests as to 600 shares on November 17,
1999, vests in equal monthly increments from December 1,
1999 to January 1, 2009 and vests as to 206 shares on
January 1, 2009. |
|
(23) |
|
This option vests as to 1,100 shares on January 17,
1999, vests in equal monthly increments from December 1,
1999 to March 1, 2009 and vests as to 292 shares on
April 1, 2009. |
|
(24) |
|
This option vests in 54 monthly increments commencing on
January 1, 2005. |
|
(25) |
|
This option was originally granted on September 27, 2004
and vests in 54 monthly increments commencing on
January 1, 2005. |
27
Option
Exercises and Stock Vested
The following table sets forth certain information regarding the
number of stock options exercised and the number of stock awards
that vested in the fiscal year ended November 30, 2007
under our equity incentive plans and the corresponding amounts
realized by the named executive officers.
OPTION
EXERCISES AND STOCK VESTED TABLE FISCAL YEAR
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value
|
|
|
|
|
|
Value
|
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
Number of Shares
|
|
|
Realized on
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
Acquired on Vesting
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Joseph W. Alsop
|
|
|
481,475
|
|
|
$
|
9,344,264
|
|
|
|
|
|
|
|
|
|
Norman R. Robertson
|
|
|
53,025
|
|
|
|
964,364
|
|
|
|
|
|
|
|
|
|
David G. Ireland
|
|
|
82,050
|
|
|
|
1,416,894
|
|
|
|
|
|
|
|
|
|
Richard D. Reidy
|
|
|
51,000
|
|
|
|
983,698
|
|
|
|
|
|
|
|
|
|
Jeffrey P. Stamen
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
$
|
145,750
|
|
Potential
Payments upon Termination or Change of Control
We do not have employment or severance agreements with our named
executive officers. However, we have entered into an Employee
Retention and Motivation Agreement with each of the named
executive officers. Each agreement provides for certain payments
and benefits upon a change of control (as defined in the
agreement) of our company
and/or upon
an involuntary termination (as defined in the agreement) of the
executive officers employment by the company within 12
months. Under these agreements, upon a change of control, each
executive officers annual cash bonus award will be fixed
and guaranteed at his respective target level. Payment of this
bonus will immediately occur on a pro-rata basis with respect to
the elapsed part of the relevant fiscal year. In addition, upon
a change of control, all outstanding unvested options and
restricted equity of the executive officer will fully
accelerate, unless the acquirer assumes all such options and
restricted equity. Upon involuntary termination of the executive
officer within 12 months following a change of control, all
remaining outstanding options and restricted equity of the
executive officer will automatically become vested, the
executive officer will be entitled to receive a lump sum payment
equal to 15 months of his total target compensation, and
his benefits will continue for 15 months.
For purposes of these agreements, a change of
control is defined as the occurrence of any one of the
following events: (1) any person becoming the beneficial
owner (as defined in the Exchange Act) of 50% or more of the
total voting power of our outstanding stock; (2) certain
changes in a majority of our Board of Directors;
(3) certain mergers or consolidations of our company with
another entity; (4) the liquidation of our company; or
(5) the sale of all or substantially all of our assets.
An involuntary termination is defined as:
(1) the assignment to the executive of any duties or the
significant reduction of his duties, either of which is
materially inconsistent with his position and responsibilities
in effect immediately prior to such assignment, or the removal
of the executive from such position and responsibilities, which
is not effected for disability or for cause (as
defined in the agreement); (2) a material reduction in the
base salary
and/or bonus
of the executive as in effect immediately prior to such
reduction; (3) a material reduction in the kind or level of
employee benefits to which the executive is entitled immediately
prior to such reduction with the result that the
executives overall benefit package is significantly
reduced; (4) the relocation of the executive to a facility
or a location more than 50 miles from the executives
then present location; (5) any purported termination of the
executive by us which is not effected for death or disability or
for cause, or any purported termination for cause
28
for which the grounds relied upon are not valid; or (6) our
failure to obtain, on or before a change of control, the
assumption of the terms of the agreement by any successor.
Cause is defined as: (1) any act of personal
dishonesty taken by the executive in connection with his
responsibilities as an employee and intended to result in
substantial personal enrichment of the executive; (2) the
conviction of a felony; (3) a willful act by the executive
which constitutes gross misconduct and which is injurious to our
company; and (4) continued violations by the executive of
his obligations as an employee of our company which are
demonstrably willful and deliberate on his part after written
demand for performance by us.
In the event that any amounts provided for under these
agreements or otherwise payable to the executive officer would
constitute parachute payments within the meaning of
Section 280G of the Internal Revenue Code and be subject to
the related excise tax, the executive would be entitled to
receive either full payment of the benefits under the agreement
or such lesser amount which would result in no portion of the
benefits being subject to the excise tax, whichever results in
the greatest amount of after-tax benefits to the executive
officer. The agreements do not require the company to provide
any tax
gross-up
payments.
The following tables indicate the estimated payments and
benefits that each of the named executive officers would have
received under their respective Employee Retention and
Motivation Agreements with the company, assuming that the change
of control of our company
and/or
termination of his employment occurred in the circumstances
described above at November 30, 2007. These amounts are
estimates only and do not necessarily reflect the actual amounts
that would be paid to the named executive officer, which would
only be known at the time that he becomes entitled to such
payment.
Joseph W.
Alsop
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
Within 12
|
|
|
|
|
|
|
Months
|
|
|
|
Change of
|
|
|
Following
|
|
|
|
Control
|
|
|
Change of
|
|
Payments and Benefits
|
|
Only
|
|
|
Control
|
|
|
Cash Severance
|
|
$
|
0
|
|
|
$
|
437,498
|
|
Pro Rata Bonus
|
|
|
325,000
|
|
|
|
406,250
|
|
Stock Options(1)
|
|
|
0
|
|
|
|
1,540,362
|
|
Benefits
|
|
|
0
|
|
|
|
5,677
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
325,000
|
|
|
$
|
1,952,289
|
|
Norman R.
Robertson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
Within 12
|
|
|
|
|
|
|
Months
|
|
|
|
Change of
|
|
|
Following
|
|
|
|
Control
|
|
|
Change of
|
|
Payments and Benefits
|
|
Only
|
|
|
Control
|
|
|
Cash Severance
|
|
$
|
0
|
|
|
$
|
343,748
|
|
Pro Rata Bonus
|
|
|
210,000
|
|
|
|
262,500
|
|
Stock Options(1)
|
|
|
0
|
|
|
|
531,885
|
|
Benefits
|
|
|
0
|
|
|
|
5,069
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
210,000
|
|
|
$
|
1,143,202
|
|
29
David G.
Ireland
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
Within 12
|
|
|
|
|
|
|
Months
|
|
|
|
Change of
|
|
|
Following
|
|
|
|
Control
|
|
|
Change of
|
|
Payments and Benefits
|
|
Only
|
|
|
Control
|
|
|
Cash Severance
|
|
$
|
0
|
|
|
$
|
384,499
|
|
Pro Rata Bonus
|
|
|
240,000
|
|
|
|
300,000
|
|
Stock Options(1)
|
|
|
0
|
|
|
|
703,374
|
|
Benefits
|
|
|
0
|
|
|
|
5,193
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
240,000
|
|
|
$
|
1,393,066
|
|
Richard
D. Reidy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
Within 12
|
|
|
|
|
|
|
Months
|
|
|
|
Change of
|
|
|
Following
|
|
|
|
Control
|
|
|
Change of
|
|
Payments and Benefits
|
|
Only
|
|
|
Control
|
|
|
Cash Severance
|
|
$
|
0
|
|
|
$
|
331,249
|
|
Pro Rata Bonus
|
|
|
200,000
|
|
|
|
250,000
|
|
Stock Options(1)
|
|
|
0
|
|
|
|
553,044
|
|
Benefits
|
|
|
0
|
|
|
|
3,065
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
200,000
|
|
|
$
|
1,137,358
|
|
Jeffrey
P. Stamen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
Within 12
|
|
|
|
|
|
|
Months
|
|
|
|
Change of
|
|
|
Following
|
|
|
|
Control
|
|
|
Change of
|
|
Payments and Benefits
|
|
Only
|
|
|
Control
|
|
|
Cash Severance
|
|
$
|
0
|
|
|
$
|
296,876
|
|
Pro Rata Bonus
|
|
|
161,500
|
|
|
|
201,874
|
|
Stock Options(1)
|
|
|
0
|
|
|
|
489,386
|
|
Benefits
|
|
|
0
|
|
|
|
4,937
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
161,500
|
|
|
$
|
993,373
|
|
|
|
|
(1) |
|
In the event of a change of control, there is no accelerated
vesting of options provided that the acquirer assumes all
existing, outstanding options of the individual. These tables
have been prepared under that assumption. However, if the
acquirer does not assume all existing, outstanding options of
the individual, all unvested options become fully vested and the
value indicated in the second column would apply upon a change
of control. The amounts shown in the second column are
calculated using the exercise price for each unvested option,
and the closing price of our common stock on November 30,
2007, which was $31.63. |
30
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
beneficial ownership of our common stock as of the record date:
|
|
|
|
|
by each person who is known by us to beneficially own more than
5% of the outstanding shares of our common stock;
|
|
|
|
by each director of our company;
|
|
|
|
by each of the named executive officers; and
|
|
|
|
by all directors and executive officers of our company as a
group.
|
|
|
|
|
|
|
|
|
|
|
|
Beneficially Owned Shares
|
Name and Address of Beneficial Owner(1)
|
|
Number
|
|
Percent
|
|
T. Rowe Price Associates, Inc.(2)
|
|
|
3,262,117
|
|
|
|
7.9
|
%
|
100 East Pratt Street
Baltimore, MD 21202
|
|
|
|
|
|
|
|
|
Private Capital Management, L.P.(3)
|
|
|
2,806,588
|
|
|
|
6.8
|
%
|
8889 Pelican Bay Blvd., Suite 500
Naples, FL 34108
|
|
|
|
|
|
|
|
|
FMR LLC, Edward C. Johnson 3d(4)
|
|
|
2,672,178
|
|
|
|
6.5
|
%
|
82 Devonshire Street
Boston, MA 02109
|
|
|
|
|
|
|
|
|
Barclays Global Investors, N.A.(5)
|
|
|
2,519,696
|
|
|
|
6.1
|
%
|
45 Fremont Street
San Francisco, CA 94015
|
|
|
|
|
|
|
|
|
Cardinal Capital Management, LLC(6)
|
|
|
2,216,710
|
|
|
|
5.4
|
%
|
One Greenwich Office Park
Greenwich, CT 06031
|
|
|
|
|
|
|
|
|
Joseph W. Alsop(7)
|
|
|
1,885,978
|
|
|
|
4.4
|
%
|
Richard D. Reidy(8)
|
|
|
399,628
|
|
|
|
*
|
|
David G. Ireland(9)
|
|
|
300,979
|
|
|
|
*
|
|
Norman R. Robertson(10)
|
|
|
268,666
|
|
|
|
*
|
|
Michael L. Mark(11)
|
|
|
192,931
|
|
|
|
*
|
|
Jeffrey P. Stamen(12)
|
|
|
121,275
|
|
|
|
*
|
|
Scott A. McGregor(13)
|
|
|
100,347
|
|
|
|
*
|
|
Roger J. Heinen, Jr.(14)
|
|
|
42,596
|
|
|
|
*
|
|
Charles F. Kane(15)
|
|
|
14,639
|
|
|
|
*
|
|
Barry N. Bycoff(16)
|
|
|
10,777
|
|
|
|
*
|
|
David A. Krall
|
|
|
0
|
|
|
|
*
|
|
All executive officers and directors as a group
(14 persons)(17)
|
|
|
3,518,699
|
|
|
|
7.9
|
%
|
|
|
|
* |
|
Less than 1% |
|
(1) |
|
All persons named in the table have sole voting and investment
power with respect to all shares of our common stock shown as
beneficially owned by them, subject to community property laws
where applicable and subject |
31
|
|
|
|
|
to the other information contained in the footnotes to this
table. Unless otherwise noted the address of such person is
c/o Progress
Software Corporation, 14 Oak Park, Bedford, Massachusetts 01730. |
|
(2) |
|
Derived from Schedule 13G/A filed on February 12,
2008. The Schedule 13G/A reported that T. Rowe Price held sole
voting power over 905,600 shares and sole dispositive power
over 3,262,117 shares. |
|
(3) |
|
Derived from Schedule 13G/A filed on February 14,
2008. The Schedule 13G/A reported sole voting and dispositive
power over 3,200 shares and shared voting and dispositive
power over 2,803,388 shares. |
|
(4) |
|
Derived from Schedule 13G filed on February 14, 2008.
The Schedule 13G reported that Fidelity Management and
Research Company is the beneficial owner of
2,672,178 shares. Edward C. Johnson 3d and FMR, through its
control of Fidelity, each has sole power to dispose of the
2,672,178 shares. |
|
(5) |
|
Derived from Schedule 13G/A filed on February 6, 2008
by Barclays Global Investors, N.A., Barclays Global
Fund Advisors and Barclays Global Investors, Ltd. The
Schedule 13G/A reported sole voting power over
2,003,552 shares and sole dispositive power over
2,519,696 shares. |
|
(6) |
|
Derived from Schedule 13G filed on February 14, 2008. The
Schedule 13G reported that Cardinal Capital Management held
sole voting power over 1,247,100 shares and sole
dispositive power over 2,216,710 shares. |
|
(7) |
|
Includes 1,555,351 shares issuable upon the exercise of
outstanding options that are exercisable within 60 days of
February 27, 2008. |
|
(8) |
|
Includes 398,628 shares issuable upon the exercise of
outstanding options that are exercisable within 60 days of
February 27, 2008. |
|
(9) |
|
Includes 297,410 shares issuable upon the exercise of
outstanding options that are exercisable within 60 days of
February 27, 2008. |
|
(10) |
|
Includes 264,668 shares issuable upon the exercise of
outstanding options that are exercisable within 60 days of
February 27, 2008. |
|
(11) |
|
Includes 116,931 shares issuable upon the exercise of
outstanding options that are exercisable within 60 days of
February 27, 2008. |
|
(12) |
|
Includes 111,741 shares issuable upon the exercise of
outstanding options that are exercisable within 60 days of
February 27, 2008. |
|
(13) |
|
Includes 81,547 shares issuable upon the exercise of
outstanding options that are exercisable within 60 days of
February 27, 2008 and 6,800 fully vested deferred stock
units. Also includes 12,000 shares held jointly by
Mr. McGregor and his spouse. |
|
(14) |
|
Includes 35,500 shares issuable upon the exercise of
outstanding options that are exercisable within 60 days of
February 27, 2008 and 7,096 fully vested deferred stock
units. |
|
(15) |
|
Includes 6,834 shares issuable upon the exercise of
outstanding options that are exercisable within 60 days of
February 27, 2008 and 7,805 fully vested deferred stock
units. |
|
(16) |
|
Includes 5,000 shares issuable upon the exercise of
outstanding options that are exercisable within 60 days of
February 27, 2008 and 5,777 fully vested deferred stock
units. |
|
(17) |
|
Includes 3,052,355 shares issuable upon the exercise of
outstanding options that are exercisable within 60 days of
February 27, 2008 and 27,478 fully vested deferred stock
units. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our directors, executive officers and holders of more
than 10% of our common stock to file with the SEC initial
reports of ownership and reports of changes in ownership of our
common stock. These reporting persons are required by
regulations of the SEC to furnish us with copies of all such
filings. Based solely on a review of the copies of such forms
that we have received, and on written
32
representations from certain reporting persons, we believe that,
with respect to the fiscal year ended November 30, 2007,
our directors, officers and 10% shareholders complied with all
applicable Section 16(a) filing requirements, except that
Mr. Kane inadvertently filed a Form 4 late, one day
after the due date.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
We have certain indemnification obligations to our directors and
executive officers, including the advancement of expenses in
certain circumstances. During fiscal year 2007,
Messrs. Alsop, Heinen, Robertson and James
D. Freedman, our Senior Vice President and General Counsel,
were reimbursed for legal services under our indemnification
obligations totaling $406,396, $246,544, $173,433 and $188,880,
respectively.
We engaged Mintz Levin Cohn Ferris Glovsky and Popeo PC, during
fiscal year 2007 to provide legal services, principally relating
to immigration. Neil H. Aronson, the
brother-in-law
of Mr. Freedman, is a partner of Mintz. For fiscal year
2007, legal fees billed to us by Mintz were $105,604 and
expenses billed were $44,388. Also, we have a contract with High
Performance Learning Inc., or HPL, pursuant to which we retained
the services of HPL to assist us in preparing and submitting an
application for training program grants from the Commonwealth of
Massachusetts Workforce Training Fund. We were approved for
grants of a total amount of $203,403. Pursuant to the contract
with HPL, we are required to utilize HPL for the provision of a
minimum of 75% of the training programs covered by the grants.
We were therefore committed to pay to HPL for training services
a minimum of $152,551 under the HPL contract. During fiscal year
2007, we paid approximately $134,970 to HPL. Steven Aronson, the
brother-in-law
of Mr. Freedman, is President of HPL.
We did not engage in any other transactions or series of similar
transactions in which the amount involved exceeded $120,000 and
in which any of our directors or executive officers, any holder
of more than 5% of any class of our voting securities or any
member of the immediate family of any of the foregoing persons
had a direct or indirect material interest.
PROPOSAL 3: APPROVAL
OF THE COMPANYS 2008 STOCK OPTION AND INCENTIVE
PLAN
On March 12, 2008, our Board of Directors adopted the
Progress Software Corporation 2008 Stock Option and Incentive
Plan, subject to the approval of our shareholders. The 2008 Plan
will become effective if approved by our shareholders and will
replace our 1997 Stock Incentive Plan, our 1992 Incentive and
Nonqualified Stock Option Plan and our 1994 Stock Incentive Plan
(which we refer to together in this proxy statement as the
Old Stock Plans). We will not grant any further
awards under the Old Stock Plans after the 2008 Plan becomes
effective.
The material features of the 2008 Plan are:
|
|
|
|
|
The maximum number of shares to be issued under the 2008 Plan is
the sum of 3,800,000 shares of our common stock and the
shares available for grant under the Old Stock Plans
(176,562 shares as of February 27, 2008);
|
|
|
|
The award of stock options (both incentive and non-qualified
options), stock appreciation rights, restricted stock awards,
unrestricted stock awards, performance shares, deferred stock
awards, cash-based awards and dividend equivalent rights is
permitted;
|
|
|
|
The grant of any award other than an option or a stock
appreciation right will reduce the number of shares of common
stock available for issuance under the 2008 Plan by
2.25 shares of common stock for each such share actually
subject to the award and will be deemed as an award of
2.25 shares of common stock for each such share actually
subject to the award. The grant of an option or a stock
appreciation right will be deemed an award of one share of
common stock for each such share actually subject to the award;
|
|
|
|
Any material amendment (other than an amendment that curtails
the scope of the 2008 Plan) is subject to approval by our
shareholders; and
|
33
|
|
|
|
|
The 2008 Plan will be administered by either the Compensation
Committee of the Board or by the full Board (in either case, the
Administrator). The Administrator, in its
discretion, may grant a variety of incentive awards based on our
common stock.
|
Based solely on the closing price of our common stock as
reported by NASDAQ on February 27, 2008, the maximum
aggregate market value of the 3,800,000 new shares that could
potentially be issued under the 2008 Plan is $112,442,000. The
shares issued by us under the 2008 Plan will be authorized but
previously unissued shares. The shares underlying any awards
that are forfeited, are canceled, expire, are reacquired by us
prior to vesting, are satisfied without the issuance of shares
of common stock, or are otherwise terminated (other than by
exercise) under the 2008 Plan and the Old Stock Plans are added
back to the shares available for issuance under the 2008 Plan.
Shares tendered or held back upon exercise of an option or
settlement of an award to cover the exercise price or tax
withholding are not available for future issuance under the 2008
Plan. As of February 27, 2008, we had 8,422,915 options
outstanding with a weighted average exercise of $22.70 and a
weighted average remaining term of 5.05 years. In addition
to the shares available for grant under the Old Stock Plans, we
have a total of 632,807 shares available for grant under
our 2002 Nonqualified Stock Plan and our 2004 Inducement Plan,
which such plans will remain in effect following approval of the
2008 Plan.
To ensure that certain awards granted under the 2008 Plan to a
Covered Employee (as defined in the Internal Revenue
Code of 1986, or the Code) qualify as performance based
compensation under Section 162(m) of the Code, the
2008 Plan provides that the Administrator may require that the
vesting of such awards be conditioned on the satisfaction of
performance criteria that may include any or all of the
following: (1) earnings before interest, taxes,
depreciation and amortization, (2) net income (loss)
(either before or after interest, taxes, depreciation
and/or
amortization), (3) changes in the market price of our
common stock, (4) economic value-added, (5) sales or
revenue, (6) acquisitions or strategic transactions,
(7) operating income (loss), (8) cash flow (including,
but not limited to, operating cash flow and free cash flow),
(9) return on capital, assets, equity, or investment,
(10) total shareholder returns, (11) return on sales,
(12) gross or net profit levels, (13) productivity,
(14) expense, (15) margins, (16) operating
efficiency, (17) working capital, (18) earnings (loss)
per share of our common stock, (19) sales or market shares
and (20) number of customers, any of which may be measured
either in absolute terms or as compared to any incremental
increase or as compared to results of a peer group. The
Administrator will select the particular performance criteria
within 90 days following the commencement of a performance
cycle. Subject to adjustments for stock splits and similar
events, the maximum award granted to any one individual that is
intended to qualify as performance based
compensation under Section 162(m) of the Code will
not exceed 200,000 shares of common stock for any
performance cycle. If a performance-based award is payable in
cash to any executive, it cannot exceed $2,000,000 for any
performance cycle. The 2008 Plan also provides that options or
stock appreciation rights with respect to no more than
500,000 shares of common stock may be granted to any one
individual during a calendar year.
If a quorum is present at the 2008 annual meeting, a majority of
the votes properly cast at the meeting will be required to
approve the 2008 Plan.
Our Board of Directors recommends that you vote FOR the
proposal to adopt and approve the 2008 Plan.
Summary
of the Provisions of the 2008 Plan
The following summary of the 2008 Plan is qualified in its
entirety by the specific language of the 2008 Plan, a copy of
which is attached as Annex A to this proxy statement.
The 2008 Plan is administered by either our Board of Directors
or the Compensation Committee (in either case, the
Administrator) consisting of at least two
Outside Directors. An Outside Director
means any director who (1) is not an employee of our
company or of any affiliated group, as such term is
defined in Section 1504(a) of
34
the Code, which includes the company (we refer to such a person
as an Affiliate), (2) is not a former employee
of our company or any Affiliate who is receiving compensation
for prior services (other than benefits under a tax-qualified
retirement plan) during the companys or any
Affiliates taxable year, (3) has not been an officer
of our company or any Affiliate, and (4) does not receive
remuneration from our company or any Affiliate, either directly
or indirectly, in any capacity other than as a director.
The 2008 Plan permits the granting to officers, directors,
employees and others who provide services to our company, at the
discretion of the Administrator, of a variety of stock incentive
awards based on our common stock. Awards under the 2008 Plan
include stock options (both incentive and non-qualified), stock
appreciation rights, restricted stock awards, unrestricted stock
awards, performance share awards, deferred stock awards,
cash-based awards and dividend equivalent rights. The
Administrator selects the person to whom awards are granted and
the number, type and terms of the award granted. As of
February 27, 2008, we had six non-employee directors and
approximately 1,680 employees eligible to receive awards
under the 2008 Plan.
The grant of any award other than an option or a stock
appreciation right will reduce the number of shares of common
stock available for issuance under the 2008 Plan by
2.25 shares of common stock for each such share actually
subject to the award and will be deemed an award of
2.25 shares of common stock for each such share actually
subject to the award. The grant of an option or a stock
appreciation right will be deemed an award of one share of
common stock for each such share actually subject to the award.
Stock Options. The 2008 Plan permits
the granting of (1) options to purchase common stock
intended to qualify as incentive stock options, or Incentive
Options, under Section 422 of the Code, and
(2) options that do not so qualify, or Non-Qualified
Options. The option exercise price of each option is determined
by the Administrator but may not be less than 100% of the fair
market value of the shares on the date of grant. The option
exercise price of each option cannot be reduced without
shareholder approval.
The term of each option is fixed by the Administrator and may
not exceed seven years from date of grant. The Administrator
determines at what time or times each option may be exercised
and, subject to the provisions of the 2008 Plan, the period of
time, if any, after death, disability or termination of
employment during which options may be exercised. Options may be
made exercisable in installments, and the exercisability of
options may be accelerated by the Administrator.
The exercise price of options granted under the 2008 Plan may be
paid in cash or bank check or other instrument acceptable to the
Administrator, or, with the consent of the Administrator, in
shares of common stock. The exercise price may also be delivered
by a broker pursuant to irrevocable instructions to the broker
from the optionee.
To qualify as Incentive Options, options must meet additional
requirements, including a $100,000 per year limitation on the
value of shares subject to Incentive Options which first become
exercisable in any one year, and a maximum five-year term and
exercise price of at least 110% of fair market value in the case
of greater-than-10% shareholders.
Stock Appreciation Rights. The
Administrator may also grant stock appreciation rights which
entitle the holder to receive, upon exercise, common stock
having a fair market value equal to the amount by which the fair
market value of our common stock on the date of exercise exceeds
the exercise price of the stock appreciation right, multiplied
by the number of shares with respect to which the stock
appreciation right is exercised. Stock appreciation rights may
be granted in conjunction with an option, in which event, upon
exercise of one of the awards, the number of shares with respect
to which the other award may be exercised is correspondingly
reduced. The term of each stock appreciation right is fixed by
the Administrator and may not exceed seven years.
Restricted Stock Awards. The
Administrator may also award shares of common stock subject to
such conditions and restrictions as the Administrator may
determine (we refer to such shares as Restricted
Stock).
35
These conditions and restrictions may include provisions for
vesting conditioned upon the achievement of certain performance
objectives
and/or
continued employment with us through a specified vesting period.
In the event awards of Restricted Stock granted to employees
have a performance-based goal, the restriction period will be at
least one year, and in the event awards of Restricted Stock
granted to employees have a time-based restriction, the
restriction period will be at least three years, but vesting can
occur incrementally over the three-year period. The purchase
price, if any, of shares of Restricted Stock is determined by
the Administrator.
If a participant who holds unvested shares of Restricted Stock
terminates employment for any reason (including death), the
unvested shares will be automatically forfeited in exchange for
the amount, if any, which the participant paid for them. Prior
to the fulfillment of the applicable conditions, the participant
will have all rights of a shareholder with respect to the shares
of Restricted Stock, including voting and dividend rights,
subject only to the conditions and restrictions set forth in the
2008 Plan and in the participants Restricted Stock award.
Unrestricted Stock Awards. The
Administrator may also grant shares of common stock (at no cost
or for a purchase price determined by the Administrator which
shall not be less than fair market value) which are free from
any restrictions under the 2008 Plan (we refer to such shares as
Unrestricted Stock). Unrestricted Stock may be
issued to employees in recognition of past services or other
valid consideration, and may be issued in lieu of cash bonuses
to be paid to employees pursuant to our other bonus plans.
Participants may elect to receive all or a portion of their
compensation in shares of Unrestricted Stock by entering into an
irrevocable agreement with us no later than the date specified
by the Administrator.
Performance Share Awards. The
Administrator may also grant performance share awards entitling
the recipient to receive shares of common stock upon the
achievement of individual or company performance goals and such
other conditions as the Administrator determines.
Deferred Stock Awards. The
Administrator may award phantom stock units as deferred stock
awards to participants. Deferred stock awards are ultimately
payable in the form of shares of common stock and may be subject
to such conditions and restrictions as the Administrator may
determine. These conditions and restrictions may include the
achievement of certain performance objectives
and/or
continued employment with us through a specified vesting period.
However, in the event these awards granted to employees have a
performance-based goal, the restriction period will be at least
one year, and in the event these awards granted to employees
have a time-based restriction, the restriction period will be at
least three years, but vesting can occur incrementally over the
three-year period. In the Administrators sole discretion
and subject to the participants compliance with the
procedures established by the Administrator and requirements of
Section 409A of the Code, it may permit a participant to
make an advance election to receive a portion of his or her
future cash compensation otherwise due in the form of a fully
vested deferred stock award. During the deferral period, the
deferred stock awards may be credited with dividend equivalent
rights.
Cash-based Awards. The Administrator
may also grant cash-based awards upon such terms and conditions
as determined by the Administrator, including the achievement of
individual or company performance goals. Payment of cash-based
awards may be settled in cash or shares of our common stock as
determined by the Administrator.
Dividend Equivalent Rights. The
Administrator may grant dividend equivalent rights which entitle
the participant to receive credits for dividends that would be
paid if the participant had held specified shares of common
stock. Dividend equivalent rights may be granted as a component
of another award or as a freestanding award. Dividend equivalent
rights may be settled in cash, shares of common stock or a
combination thereof, in a single installment or installments, as
specified in the award.
Amendments and Terminations. Our Board
of Directors may at any time amend or discontinue the 2008 Plan
and the Administrator may at any time amend or cancel
outstanding awards (or provide substitute awards at the
36
same exercise or purchase price) for the purpose of satisfying
changes in the law or for any other lawful purpose. Among other
things, the Administrator has the authority to accelerate the
exercisability or vesting of an award (except Restricted Stock
Awards) or extend the period for exercise of an award. However,
no such action may be taken which adversely affects any rights
under outstanding awards without the holders consent. No
amendment, unless approved by our shareholders, shall be
effective if it would permit the repricing of options or stock
appreciation rights granted to directors and officers of our
company. In addition, no such amendment, unless approved by our
shareholders, shall be effective if it would cause a material
increase in the number of shares authorized under the 2008 Plan,
a material increase in the benefits accruing to participants
under the 2008 Plan, or a change in the eligible class of
recipients under the 2008 Plan.
Sale Event Provisions. The 2008 Plan
provides that in the event of a Sale Event (as
defined in the 2008 Plan) of our company, if options and certain
other awards are not assumed or otherwise continued in the
transaction, the Administrator will accelerate the
exercisability and vesting of all outstanding awards. In such
instance, the Administrator may provide a cash payment to
holders of options and stock appreciation rights equal to the
difference between the per share cash consideration and the
exercise price of the option or stock appreciation rights.
Alternatively, the Administrator may also cancel outstanding
options and other awards effective upon the Sale Event, provided
that holders have a period of time prior to such date in which
to exercise such options and awards. In addition, the
Administrator may accelerate the vesting of any awards and waive
conditions and restrictions on any awards to the extent it may
determine appropriate.
New Plan
Benefits
Because the grant of awards under the 2008 Plan is generally
within the discretion of the Administrator, we are unable to
determine the dollar value or number of shares of common stock
that will in the future be received by or allocated to any
participant in the 2008 Plan. Accordingly, in lieu of providing
information regarding benefits that will be received under the
2008 Plan, the following table provides information concerning
the benefits that were received by the following persons or
groups during fiscal 2007 (excluding any amended stock option
grants which did not result in the awarding of any incremental
shares): each named executive officer; all current executive
37
officers, as a group; all current directors who are not
executive officers, as a group; and all employees who are not
executive officers, as a group.
The amounts in the following table represent shares of common
stock subject to options granted under our existing stock plans
during fiscal 2007, regardless of whether such options have been
exercised, and shares of common stock subject to deferred stock
awards.
New Plan
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares of
|
|
|
|
|
|
|
Common Stock To be
|
|
|
|
|
|
|
Issued Upon Exercise of
|
|
|
|
Dollar Value
|
|
|
Options or Settlement of
|
|
Name and Position
|
|
($)(1)
|
|
|
Deferred Stock Awards
|
|
|
Joseph W. Alsop
|
|
$
|
|
|
|
|
191,500
|
|
Co-Founder, Chief Executive Officer and Director-nominee
|
|
|
|
|
|
|
|
|
Norman R. Robertson
|
|
|
|
|
|
|
40,000
|
|
Senior Vice President, Finance and Administration and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
David G. Ireland
|
|
|
|
|
|
|
40,000
|
|
Executive Vice President
|
|
|
|
|
|
|
|
|
Richard D. Reidy
|
|
|
|
|
|
|
30,000
|
|
Executive Vice President
|
|
|
|
|
|
|
|
|
Jeffrey P. Stamen
|
|
|
|
|
|
|
25,000
|
|
Senior Vice President, Corporate Development and Strategy
|
|
|
|
|
|
|
|
|
All current executive officers, as a group
|
|
|
|
|
|
|
424,500
|
|
All current directors who are not executive officers, as a group
|
|
$
|
872,252
|
|
|
|
208,206
|
|
All employees who are not executive officers, as a group
|
|
|
|
|
|
|
889,600
|
|
|
|
|
(1) |
|
Grants of options to purchase shares of common stock have not
been assigned a dollar value. The dollar value for current
directors reflects the value of deferred stock units granted in
fiscal year 2007, which is calculated by multiplying the number
of deferred stock units by the closing price of our stock on the
date of grant. |
Equity
Compensation Plan Information as of November 30,
2007
The following table provides information as of November 30,
2007 regarding shares of common stock that may be issued under
our equity compensation plans. The table sets forth the total
number of shares of common stock
38
issuable upon the exercise of outstanding options as of
November 30, 2007, the weighted average exercise price of
these options and the number of shares of common stock remaining
available for future issuance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities to be
|
|
|
|
|
|
|
|
|
|
Issued Upon
|
|
|
Weighted-average
|
|
|
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Number of
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Securities
|
|
|
|
Options, Warrants
|
|
|
Options, Warrants
|
|
|
Remaining Available
|
|
Plan Category
|
|
and Rights
|
|
|
and Rights
|
|
|
For Future Issuance
|
|
|
Equity compensation plans approved by shareholders(1)
|
|
|
5,787,000
|
(2)
|
|
$
|
22.13
|
|
|
|
876,000
|
(3)
|
Equity compensation plans not approved by shareholders(4)
|
|
|
3,393,000
|
|
|
|
23.06
|
|
|
|
520,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9,180,000
|
|
|
$
|
22.47
|
|
|
|
1,396,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Consists of the 1992 Incentive and Nonqualified Stock Option
Plan, 1994 Stock Incentive Plan, 1997 Stock Incentive Plan, and
the 1991 Employee Stock Purchase Plan (ESPP). Does not include
the new shares (3,800,000) to be reserved under the 2008 Plan. |
|
(2) |
|
Does not include purchase rights accruing under the ESPP because
the purchase price (and therefore the number of shares to be
purchased) will not be determined until the end of the purchase
period. |
|
(3) |
|
Includes shares available for future issuance under the ESPP. |
|
(4) |
|
Consists of the 2002 Nonqualified Stock Plan and the 2004
Inducement Plan described below. |
We have adopted two equity compensation plans, the 2002
Nonqualified Stock Plan, or the 2002 Plan, and the 2004
Inducement Stock Plan, or the 2004 Plan, for which the approval
of shareholders was not required. The 2004 Plan is intended to
be reserved for persons to whom we may issue securities as an
inducement to become employed by our company pursuant to NASDAQ
rules and regulations. Executive officers and members of our
Board of Directors are not eligible for awards under the 2002
Plan. An executive officer or director would be eligible to
receive an award under the 2004 Plan only as an inducement to
join our company. Awards under the 2002 Plan and the 2004 Plan
may include nonqualified stock options, grants of restricted
stock, unrestricted grants of stock, grants of stock contingent
upon the attainment of performance goals and stock appreciation
rights. A total of 7,200,000 shares are issuable under the
two plans.
Federal
Tax Aspects of the 2008 Plan
The following is a summary of the principal Federal income tax
consequences of transactions under the 2008 Plan. It does not
describe all Federal tax consequences under the 2008 Plan, nor
does it describe state, local or foreign tax consequences.
Incentive Options. No taxable income is
realized by an optionee upon the grant or exercise of an
Incentive Option, but 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
issued to an optionee pursuant to the exercise of an Incentive
Option are not sold or transferred within two years from the
date of grant and within one year after the date of exercise,
then (a) 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
(b) there will be no deduction for the company for Federal
income tax purposes.
If shares of common stock acquired upon the exercise of an
Incentive Option are disposed of prior to the expiration of the
two-year or one-year holding periods described above (a
disqualifying disposition), generally (1) the
optionee will realize ordinary income in the year of disposition
in an amount equal to the excess (if any) of
39
the fair market value of the shares at exercise (or, if less,
the amount realized on a sale of such shares) over the option
price, and (2) we will be entitled to deduct such amount.
Special rules apply where all or a portion of the exercise price
of the Incentive Option is paid by tendering shares of common
stock.
If an Incentive Option is exercised at a time when it no longer
qualifies for the tax treatment described above, the option is
treated as a Non-Qualified Option. Generally, 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).
Non-Qualified Options. With respect to
Non-Qualified Options under the 2008 Plan, no income is realized
by the optionee at the time the option is granted. Generally,
(a) 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 (b) at disposition of the shares acquired upon
exercise, 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.
Stock Appreciation Rights. The
recipient of a stock appreciation right will generally be
subject to tax at ordinary income rates on the fair market value
of any common stock received upon exercise of the stock
appreciation right. We generally will be entitled to a deduction
equal to the amount of ordinary income realized by the recipient.
Restricted Stock. A recipient of
Restricted Stock generally will be subject to tax at ordinary
income rates on the fair market value of the stock at the time
that the stock is no longer subject to forfeiture, minus any
amount paid for such stock. However, a recipient who so elects
under Section 83(b) of the Code, within 30 days of the
date of issuance of the Restricted Stock, will realize ordinary
income on the date of issuance equal to the fair market value of
the shares of Restricted Stock at that time (measured as if the
shares were unrestricted and could be sold immediately), minus
any amount paid for such stock. If the shares subject to such
election are forfeited, the recipient will not be entitled to
any deduction, refund or loss for tax purposes with respect to
the forfeited shares. We generally will receive a tax deduction
equal to the amount includable as ordinary income to the
recipient.
Unrestricted Stock. The recipient of
Unrestricted Stock will generally be subject to tax at ordinary
income rates on the fair market value of such Unrestricted Stock
on the date that such Unrestricted Stock is issued to the
participant, minus any amount paid for such stock. We generally
will be entitled to a deduction equal to the amount treated as
compensation that is taxable as ordinary income to the recipient.
Performance Share Awards. The recipient
of a performance share award will generally be subject to tax at
ordinary income rates on the fair market value of any common
stock issued under the award on the date of issuance of the
shares, and we generally will be entitled to a deduction equal
to the amount of ordinary income realized by the recipient.
Deferred Stock Awards. The recipient of
a deferred stock award will not be subject to any income tax
until the award is settled in shares of common stock so long as
the requirements of Section 409A of the Code are satisfied.
Upon settlement of the award in shares of common stock, the
recipient will be subject to tax at ordinary income rates on the
fair market value of the common stock. We generally will be
entitled to a deduction equal to the amount of ordinary income
realized by the recipient.
Cash-based Awards. The recipient of a
cash-based award will be subject to tax at ordinary income rates
when the award is settled. We generally will be entitled to a
deduction equal to the amount of ordinary income realized by the
recipient.
Dividends and Dividend
Equivalents. Dividends paid on common stock
(including Restricted Stock) and dividend equivalents paid with
respect to deferred stock awards will be taxed at ordinary
income rates to the
40
recipient. Generally, we will not be entitled to any deduction
for dividends, except in the case of dividends paid on
Restricted Stock with respect to which no Section 83(b)
election has been filed. We will be entitled to a deduction for
dividend equivalents.
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 us, 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 Deductions. As a result
of Section 162(m) of the Code, our deduction for certain
awards under the 2008 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 million a year (other than performance-based
compensation that otherwise meets the requirements of
Section 162(m) of the Code). The 2008 Plan is structured to
allow certain awards to qualify as performance-based
compensation.
The foregoing is only a summary of the principal Federal income
tax consequences of transactions under the 2008 Plan. This
summary does not purport to be a complete description of all
Federal tax implications, nor does it discuss the income tax
laws of any municipality, state or foreign country in which a
recipient under the 2008 Plan may reside or otherwise be subject
to tax. Recipients of equity under the 2008 Plan are strongly
urged to consult their own tax advisor concerning the
application of various tax laws that may apply to a
recipients particular situation
PROPOSAL 4:
RATIFICATION OF THE SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Proposal Four is to ratify the selection by the Audit
Committee of Deloitte & Touche LLP as our independent
registered public accounting firm for the current fiscal year
ending November 30, 2008. Deloitte & Touche was
the independent registered public accounting firm for our
company for the fiscal year ended November 30, 2007.
Although ratification by shareholders is not required by law or
by our by-laws, the Audit Committee believes that submission of
its selection to shareholders is a matter of good corporate
governance. Even if the selection is ratified, the Audit
Committee, in its discretion, may select a different independent
registered public accounting firm at any time if the Audit
Committee believes that such a change would be in the best
interests of our company and its shareholders. If our
shareholders do not ratify the selection of Deloitte &
Touche, the Audit Committee will take that fact into
consideration, together with such other factors it deems
relevant, in determining its next selection of independent
auditors.
AUDIT
COMMITTEE REPORT
Management is responsible for establishing and maintaining
adequate internal control over financial reporting to ensure the
integrity of the companys financial statements. The
companys independent registered public accounting firm,
Deloitte & Touche LLP, is responsible for performing
an audit of the effectiveness of the companys internal
control over financial reporting in conjunction with an audit of
the consolidated financial statements in accordance with
standards of the Public Company Accounting Oversight Board
(United States) (PCAOB) and issuing opinions on the financial
statements and the effectiveness of internal control over
financial reporting. The Audit Committee has met and held
discussions with management and Deloitte & Touche
regarding the internal control over financial reporting and the
financial audit process of the company.
41
The Audit Committee obtained from Deloitte & Touche
the written disclosures and letter required by Independence
Standards Board Standard No. 1, Independence
Discussions with Audit Committees. The Audit Committee and
Deloitte & Touche have discussed such disclosures and
letter, as well as the independence of Deloitte &
Touche.
The Audit Committee reviewed and discussed the companys
audited consolidated financial statements for the fiscal year
ended November 30, 2007 with management and
Deloitte & Touche. Management has represented to the
Audit Committee that the financial statements were prepared in
accordance with accounting principles generally accepted in the
United States of America.
The Audit Committee reviewed and discussed with
Deloitte & Touche the communications required by
standards established by the PCAOB, including those described in
Statement on Auditing Standards No. 61, Communication
with Audit Committees, as amended, and discussed the
results of Deloitte & Touches examination of the
financial statements.
Based on the above-mentioned reviews and discussions with
management and Deloitte & Touche, the Audit Committee
recommended to the Board that the companys audited
consolidated financial statements be included in its Annual
Report on
Form 10-K
for the fiscal year ended November 30, 2007, for filing
with the Securities and Exchange Commission.
No portion of this Audit Committee Report shall be deemed to be
incorporated by reference into any filing under the Securities
Act of 1933 or the Securities Exchange Act of 1934, 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.
Respectfully submitted by the Audit Committee,
|
|
|
|
|
Charles F. Kane, Chairman
|
Barry N. Bycoff
Michael L. Mark
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Selection
of Independent Registered Public Accounting Firm
The Audit Committee has selected the firm of
Deloitte & Touche LLP, independent registered public
accounting firm, to serve as our independent registered public
accounting firm for the fiscal year ending November 30,
2008. We have been advised that a representative of
Deloitte & Touche will be present at the annual
meeting. This representative will have the opportunity to make a
statement if he or she desires and will be available to respond
to appropriate questions presented at the meeting.
42
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FEES
Aggregate fees billed to us for services performed for the
fiscal years ended November 30, 2007 and November 30,
2006 by our independent registered public accounting firm,
Deloitte & Touche LLP, were as follows:
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007
|
|
|
Fiscal 2006
|
|
|
Audit Fees(1)
|
|
$
|
2,211,551
|
|
|
$
|
2,178,000
|
|
Tax Fees(2)
|
|
|
648,462
|
|
|
|
659,000
|
|
Audit-Related Fees(3)
|
|
|
15,188
|
|
|
|
11,000
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes statutory audit fees related to our wholly-owned
foreign subsidiaries, as the results of these audits are
utilized in the audit of our consolidated financial statements.
In accordance with the policy on Audit Committee pre-approval,
100% of audit services provided by the independent registered
public accounting firm are pre-approved. |
|
(2) |
|
Includes fees primarily for tax compliance, tax advice and tax
planning (domestic and international). In accordance with the
policy on Audit Committee pre-approval, 100% of tax services
provided by the independent registered public accounting firm
are pre-approved. |
|
(3) |
|
Includes fees related to the performance of audits and attest
services not required by statute or regulations, due diligence
related to mergers, acquisitions, proposed transactions, and
accounting consultations regarding the application of generally
accepted accounting principles to proposed transactions. In
accordance with the policy on Audit Committee pre-approval, 100%
of audit-related services provided by the independent registered
public accounting firm are pre-approved. |
POLICY ON
AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT
SERVICES OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit Committee is responsible for appointing, setting
compensation, and overseeing the work of our independent
registered public accounting firm. The Audit Committee has
established a policy regarding pre-approval of all audit and
permissible non-audit services provided by the independent
registered public accounting firm.
Requests for specific services by the independent registered
public accounting firm which comply with the auditor services
policy are reviewed by our Finance, Tax, and Internal Audit
departments. Requests approved by the group are aggregated and
submitted to the Audit Committee in one of the following ways:
|
|
|
|
|
Request for approval of services at a meeting of the Audit
Committee; or
|
|
|
|
Request for approval of services by the Chairman of the Audit
Committee, with presentation of any such decision to the full
committee at the next meeting of the Audit Committee.
|
The request may be made with respect to either specific services
or a type of service for predictable or recurring services.
OTHER
MATTERS
Our 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 card intend to vote the shares represented by
that proxy in accordance with their best judgment on such
matters.
43
PROPOSALS OF
SHAREHOLDERS FOR 2009 ANNUAL MEETING
We anticipate that our 2009 Annual Meeting of Shareholders will
be held on or about April 23, 2009. Proposals of
shareholders intended to be presented at the 2009 annual meeting
must, in order to be included in our proxy statement and the
form of proxy for the 2009 annual meeting, be received at our
principal executive offices by November 24, 2008.
Under our by-laws, any shareholder intending to present any
proposal (other than a proposal made by, or at the direction of,
our Board of Directors) at the 2009 annual meeting, must give
written notice of such proposal (including certain information
about any nominee or matter proposed and the proposing
shareholder) to our Secretary not less than 60 days nor
more than 90 days prior to the date of the scheduled annual
meeting. However, if less than 70 days notice or
prior public disclosure of the scheduled annual meeting is given
or made, such notice, to be timely, must be given within
10 days following such public disclosure or mailing of such
notice, whichever is earlier.
EXPENSES
OF SOLICITATION
The cost of solicitation of proxies will be borne by us. In
addition to soliciting shareholders by mail, we will reimburse
banks, brokers and other custodians, nominees and fiduciaries
for their reasonable
out-of-pocket
costs in forwarding proxy materials to the beneficial owners of
shares held of record by them. Our directors, officers and
regular employees may, without additional compensation, solicit
shareholders in person or by mail, telephone, facsimile, or
otherwise following the original solicitation.
AVAILABLE
INFORMATION
Shareholders of record on February 27, 2008 will receive
with this proxy statement a copy of our 2007 Annual Report on
Form 10-K,
containing detailed financial information concerning our
company. Our 2007 Annual Report on
Form 10-K
is also available on-line from the SECs EDGAR database at
the following address:
www.sec.gov/cgi-bin/srch-edgar?progress+software.
44
PROGRESS
SOFTWARE CORPORATION
2008 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL
PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Progress Software Corporation 2008
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 Progress
Software 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
shareholders, 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
Committee.
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, Performance Share Awards and Dividend Equivalent Rights.
Award Document means a written or electronic
document setting forth the terms and provisions applicable to an
Award granted under the Plan. Each Award Document 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.
Cause means (i) any material breach by
the grantee of any agreement to which the grantee and the
Company are both parties, (ii) any act or omission to act
by the grantee which may have a material and adverse effect on
the Companys business or on the grantees ability to
perform services for the Company, including, without limitation,
the commission of any crime (other than ordinary traffic
violations), or (iii) any material misconduct or material
neglect of duties by the grantee in connection with the business
or affairs of the Company or any affiliate of the Company.
Code means the Internal Revenue Code of 1986,
as amended, and any successor Code, and related rules,
regulations and interpretations.
Committee means a committee which is
comprised of not less than two Non-Employee Directors who are
independent.
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.
Disability means disability as set forth in
Section 22(e)(3) of the Code.
A-1
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 shareholders as set forth in Section 21.
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 closing price per share of Stock as reported by
the NASDAQ Global Select Market or another national securities
exchange. 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. If
the Stock is not quoted on the NASDAQ Global Select Market or
another national securities exchange, the fair market value of
the Stock shall be as determined in good faith by the
Administrator
Incentive Stock Option means any Stock Option
designated and qualified as an incentive stock
option as defined in Section 422 of the Code.
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.
Performance-Based Award means any Restricted
Stock Award, Deferred Stock Award, Performance Share Award or
Cash-Based Award granted to a Covered Employee that is intended
to qualify as performance-based compensation under
Section 162(m) of the Code and the regulations promulgated
thereunder.
Performance Criteria means the criteria that
the Administrator selects for purposes of establishing the
Performance Goal or Performance Goals for an individual for a
Performance Cycle. The Performance Criteria (which shall be
applicable to the organizational level specified by the
Administrator, including, but not limited to, the Company or a
unit, division, group, or Subsidiary of the Company) that will
be used to establish Performance Goals are limited to the
following: revenue, non-GAAP operating income, earnings before
interest, taxes, depreciation and amortization, net income
(loss) (either before or after interest, taxes, depreciation
and/or
amortization), changes in the market price of the Stock,
economic value-added, sales or revenue, acquisitions or
strategic transactions, cash flow (including, but not limited
to, operating cash flow and free cash flow), return on capital,
assets, equity, or investment, total shareholder returns, return
on sales, gross or net profit levels, productivity, expense,
margins, operating efficiency, working capital, earnings (loss)
per share of Stock, sales or market shares and number of
customers, any of which may be measured either in absolute terms
or as compared to any incremental increase or as compared to
results of a peer group.
Performance Cycle means one or more periods
of time, which may be of varying and overlapping durations, as
the Administrator may select, over which the attainment of one
or more Performance Criteria will be measured for the purpose of
determining a grantees right to and the payment of a
Restricted Stock Award, Deferred Stock Award, Performance Share
Award or Cash-Based Award.
Performance Goals means, for a Performance
Cycle, the specific goals established in writing by the
Administrator for a Performance Cycle based upon the Performance
Criteria.
Performance Share Award means an Award
entitling the recipient to acquire shares of Stock upon the
attainment of specified Performance Goals.
A-2
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 shareholders, 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.
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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. In the event
the Administrator is the Committee rather than the Board, it is
the intention of the Company that the Committee shall consist of
outside directors within the meaning of
Section 162(m) of the Code and non-employee
directors within the meaning of
Rule 16b-3
of the Exchange Act, but the authority and validity of any act
taken or not taken by the Committee shall not be affected if any
person serving on the Committee does not meet the qualification
imposed by this sentence. Except as specifically reserved to the
Board under the terms of the Plan or when the Board is serving
as Administrator, the Committee shall have full and final
authority to operate, manage and administer the Plan on behalf
of the Company. Action by the Committee shall require the
affirmative vote of a majority of all members thereof.
(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,
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Unrestricted Stock Awards, Cash-Based Awards and Performance
Share Awards, 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 and
vesting of all or any portion of any Award with the exception of
a Restricted Stock Award or Deferred Stock Award other than in
the context of a Sale Event;
(vi) subject to the provisions of Section 5(c), to
extend at any time the period in which Stock Options or Stock
Appreciation Rights may be exercised;
(vii) to reduce the per-share exercise price of any
outstanding Stock Option or Stock Appreciation Right awarded to
any employee of the Company, including any officer or director
of the Company (but not to less than 100% of Fair Market Value
on the date the reduction is made) provided, however, that such
reduction shall be effective only if approved by the
shareholders of the Company; and
(viii) 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) Award Document. Awards under
the Plan shall be evidenced by Award Documents that set forth
the terms, conditions and limitations for each Award which may
include, without limitation, the term of an Award and the
provisions applicable in the event employment or service
terminates.
(d) 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.
(e) 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
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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 applicable
United States securities law, the Code, or any other applicable
United States governing statute or law.
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|
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 equal to the sum of (i) 3,800,000,
plus (ii) the number of shares of Stock available for grant
on the Effective Date under the Progress Software Corporation
1992 Incentive and Nonqualified Stock Option Plan, the Progress
Software Corporation 1994 Stock Incentive Plan and the Progress
Software Corporation 1997 Stock Incentive Plan, as amended and
restated March 22, 2007 (together, the Old Stock
Plans), plus (iii) the number of shares of Stock
underlying any grants pursuant to the Old Stock Plans that are
forfeited, canceled, repurchased or are terminated (other than
by exercise) from and after the Effective Date, plus
(iv) the number of shares of Stock underlying any grants
pursuant to this Plan that are forfeited, canceled, repurchased
or are terminated (other than by exercise). Shares tendered or
held back upon exercise of an Option or settlement of an Award
to cover the exercise price or tax withholding shall not be
available for future issuance under the Plan. In addition, upon
exercise of Stock Appreciation Rights, the gross number of
shares exercised shall be deducted from the total number of
shares remaining 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 Stock Options or Stock Appreciation
Rights with respect to no more than 500,000 shares of Stock
may be granted to any one individual grantee during any one
calendar year period. The maximum number of shares of Stock that
may be issued in the form of Incentive Stock Options may not
exceed 3,800,000. 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) Effect of Awards. The grant of
any full value Award (i.e., an Award other than an Option or a
Stock Appreciation Right) shall be deemed, for purposes of
determining the number of shares of Stock available for issuance
under Section 3(a), as an Award of 2.25 shares of
Stock for each such share of Stock actually subject to the
Award. The grant of an Option or a Stock Appreciation Right
shall be deemed, for purposes of determining the number of
shares of Stock available for issuance under Section 3(a),
as an Award for one share of Stock for each such share of Stock
actually subject to the Award.
(c) Changes in Stock. Subject to
Section 3(d) 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, including the
maximum number of shares that may be issued in the form of
Incentive Stock Options, (ii) the number of Stock Options
or Stock Appreciation Rights that can be granted to any one
individual grantee and the maximum number of shares that may be
granted under a Performance-Based Award, (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
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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.
(d) Sale Event. The Administrator
may in its discretion accelerate the exercisability and vesting
of all outstanding Awards. 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 the Awards are not assumed, continued
or otherwise substituted in connection with a Sale Event, the
Administrator shall accelerate the exercisability and vesting of
all outstanding Awards. The Administrator shall have the option
(in its sole discretion) to (i) 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 all
outstanding Options and Stock Appreciation Rights at exercise
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) permit each grantee,
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.
(e) 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).
Grantees under the Plan will be such 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.
(a) Grant of 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.
Stock Options granted pursuant to this Section 5 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.
(b) Exercise Price. The exercise
price per share for the Stock covered by a Stock Option granted
pursuant to this Section 5 shall be determined by the
Administrator at the time of grant but shall not be less than
100 percent of
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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.
(c) Option Term. The term of each
Stock Option shall be fixed by the Administrator, but no Stock
Option shall be exercisable more than seven years after the date
the Stock Option is granted. In the case of 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.
(d) Exercisability; Rights of a
Shareholder. 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 shareholder only
as to shares acquired upon the exercise of a Stock Option and
not as to unexercised Stock Options.
(e) Method of Exercise. Stock
Options may be exercised in whole or in part, by giving written
or electronic 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 Document:
(i) In cash, by certified or bank check or other instrument
acceptable to the Administrator;
(ii) 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 have been beneficially owned by the
optionee for at least six months 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; or
(iii) 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 Document 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
attested shares. 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.
(f) 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.
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|
SECTION 6.
|
STOCK
APPRECIATION RIGHTS
|
(a) Grant of Stock Appreciation
Rights. The Administrator in its discretion
may grant Stock Appreciation Rights to any grantee
(i) alone, (ii) simultaneously with the grant of a
Stock Option and in conjunction therewith or in the alternative
thereto or (iii) subsequent to the grant of a Non-Qualified
option and in conjunction therewith or in the alternative
thereto.
(b) Exercise Price of Stock Appreciation
Rights. The exercise price per share of a
Stock Appreciation Right granted alone shall be determined by
the Administrator, but shall not be less than 100% of Fair
Market Value on the date of grant of such Stock Appreciation
Right. A Stock Appreciation Right granted simultaneously with or
subsequent to the grant of a Stock Option and in conjunction
therewith or in the alternative thereto shall have the same
exercise price as the related Stock Option, shall be
transferable only upon the same terms and conditions as the
related Stock Option, and shall be exercisable only to the same
extent as the related Stock Option; provided, however, that a
Stock Appreciation Right, by its terms, shall be exercisable
only when the Fair Market Value per share of Stock exceeds the
exercise price per share thereof.
(c) Terms and Conditions. Upon any
exercise of a Stock Appreciation Right, the number of shares of
Stock for which any related Stock Option shall be exercisable
shall be reduced by the number of shares for which the Stock
Appreciation Right shall have been exercised. The number of
shares of Stock with respect to which a Stock Appreciation Right
shall be exercisable shall be reduced upon any exercise of any
related Stock Option by the number of shares for which such
Option shall have been exercised.
Any Stock Appreciation Right shall be exercisable upon such
additional terms and conditions as may from time to time be
prescribed by the Administrator.
(d) Settlement in Shares. A Stock
Appreciation Right shall entitle the grantee upon exercise
thereof to receive from the Company, upon written request to the
Company at its principal offices (the Request), a
number of shares of Stock (with or without restrictions as to
substantial risk of forfeiture and transferability, as
determined by the Administrator in its sole discretion), having
an aggregate Fair Market Value equal to the product of
(i) the excess of Fair Market Value, on the date of such
Request, over the exercise price per share of Stock specified in
such Stock Appreciation Right or its related Option, multiplied
by (ii) the number of shares of Stock for which such Stock
Appreciation Right shall be exercised.
(e) Deemed Exercise. A Stock
Appreciation Right shall be deemed exercised on the last day of
its term, if not otherwise exercised by the holder thereof,
provided that the Fair Market Value of the Stock subject to the
Stock Appreciation Right exceeds the exercise price thereof on
such date.
(f) Term. The term of a Stock
Appreciation Right shall not exceed seven years.
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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 Document. The terms
and conditions of each such Award Document shall be determined
by the Administrator, and such terms and conditions may differ
among individual Awards and grantees.
(b) Rights as a Shareholder. Upon
execution of the Restricted Stock Award Document and payment of
any applicable purchase price, a grantee shall have the rights
of a shareholder with respect to the voting of the Restricted
Stock, subject to such conditions contained in the Restricted
Stock Award Document. Unless the Administrator shall otherwise
determine, (i) uncertificated Restricted Stock shall be
accompanied by a notation on the records of
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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 Document. Except as may
otherwise be provided by the Administrator either in the Award
Document or, subject to Section 18 below, in writing after
the Award Document is issued 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 shareholder. 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. Notwithstanding the foregoing, in the
event that any such Restricted Stock granted to employees shall
have a performance-based goal, the restriction period with
respect to such shares shall not be less than one year, and in
the event any such Restricted Stock granted to employees shall
have a time-based restriction, the total restriction period with
respect to such shares shall not be less than three years;
provided, however, that Restricted Stock with a time-based
restriction may become vested incrementally over such three-year
period. 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 Document or, subject to
Section 18 below, in writing after the Award Document 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.
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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 Document. The terms and
conditions of each such Award Document shall be determined by
the Administrator, and such terms and conditions may differ
among individual Awards and grantees. Notwithstanding the
foregoing, in the event that any such Deferred Stock Award
granted to employees shall have a performance-based goal, the
restriction period with respect to such Award shall not be less
than one year, and in the event any such Deferred Stock Award
granted to employees shall have a time-based restriction, the
total restriction period with respect to such Award shall not be
less than three years; provided, however, that any Deferred
Stock Award with a time-based restriction may become vested
incrementally over such three-year period. 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. To the extent
that a Deferred Stock Award is subject to Section 409A, it
may contain such additional terms and conditions as the
Administrator shall determine in its sole discretion in order
for such Award to comply with the requirements of
Section 409A.
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(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 Shareholder. A
grantee shall have the rights as a shareholder only as to shares
of Stock acquired by the grantee upon settlement of a Deferred
Stock Award.
(d) Termination. Except as may
otherwise be provided by the Administrator either in the Award
Document or, subject to Section 18 below, in writing after
the Award Document 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.
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SECTION 9.
|
UNRESTRICTED
STOCK AWARDS
|
(a) 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.
(b) Elections to Receive Unrestricted Stock In Lieu
of Compensation. Upon the request of a
grantee and with the consent of the Administrator, each grantee
may, pursuant to an irrevocable written election delivered to
the Company no later than the date or dates specified by the
Administrator, receive a portion of the cash compensation
otherwise due to him in Unrestricted Stock (valued at Fair
Market Value on the date or dates the cash compensation would
otherwise be paid). Such Unrestricted Stock shall be paid to the
grantee at the same time as the cash compensation would
otherwise be paid.
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SECTION 10.
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CASH-BASED
AWARDS
|
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.
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SECTION 11.
|
PERFORMANCE
SHARE AWARDS
|
(a) Nature of Performance Share
Awards. The Administrator may, in its sole
discretion, grant Performance Share Awards independent of, or in
connection with, the granting of any other Award under the Plan.
The Administrator shall determine whether and to whom
Performance Share Awards shall be granted, the Performance
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Goals, the periods during which performance is to be measured,
which may not be less than one year, and such other limitations
and conditions as the Administrator shall determine.
(b) Rights as a Shareholder. A
grantee receiving a Performance Share Award shall have the
rights of a shareholder only as to shares actually received by
the grantee under the Plan and not with respect to shares
subject to the Award but not actually received by the grantee. A
grantee shall be entitled to receive shares of Stock under a
Performance Share Award only upon satisfaction of all conditions
specified in the Performance Share Award agreement (or in a
performance plan adopted by the Administrator).
(c) Termination. Except as may
otherwise be provided by the Administrator either in the Award
agreement or, subject to Section 18 below, in writing after
the Award agreement is issued, a grantees rights in all
Performance Share Awards shall automatically terminate upon the
grantees termination of employment (or cessation of
service relationship) with the Company and its Subsidiaries for
any reason.
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SECTION 12.
|
DIVIDEND
EQUIVALENT RIGHTS
|
(a) Dividend Equivalent Rights. A
Dividend Equivalent Right may be granted hereunder to any
grantee as a component of a Deferred Stock Award, Restricted
Stock Award or Performance Share Award or as a freestanding
award. The terms and conditions of Dividend Equivalent Rights
shall be specified in the Award Document. 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 a Deferred Stock Award, Restricted Stock Award
or Performance Share Award may provide that such Dividend
Equivalent Right shall be settled upon 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 a Deferred
Stock Award, Restricted Stock Award or Performance Share 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
Document or, subject to Section 18 below, in writing after
the Award Document is issued, a grantees rights in all
Dividend Equivalent Rights or interest equivalents granted as a
component of a Deferred Stock Award, Restricted Stock Award or
Performance Share 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.
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SECTION 13.
|
PERFORMANCE-BASED
AWARDS TO COVERED EMPLOYEES
|
(a) Performance-Based Awards. Any
employee or other key person providing services to the Company
and who is selected by the Administrator may be granted one or
more Performance-Based Awards in the form of a Restricted Stock
Award, Deferred Stock Award, Performance Share Awards or
Cash-Based Award payable upon the attainment of Performance
Goals that are established by the Administrator and relate to
one or more of the Performance Criteria, in each case on a
specified date or dates or over any period or periods determined
by the Administrator. The Administrator shall define in an
objective fashion the manner of calculating the Performance
Criteria it selects to use for any Performance Period. Depending
on the Performance Criteria used to establish such Performance
Goals, the Performance Goals may be expressed in terms of
overall Company performance or the
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performance of a division, business unit, or an individual. The
Administrator, in its discretion, may adjust or modify the
calculation of Performance Goals for such Performance Period in
order to prevent the dilution or enlargement of the rights of an
individual (i) in the event of, or in anticipation of, any
unusual or extraordinary corporate item, transaction, event or
development, (ii) in recognition of, or in anticipation of,
any other unusual or nonrecurring events affecting the Company,
or the financial statements of the Company, or (iii) in
response to, or in anticipation of, changes in applicable laws,
regulations, accounting principles, or business conditions
provided however, that the Administrator may not exercise such
discretion in a manner that would increase the Performance-Based
Award granted to a Covered Employee. Each Performance-Based
Award shall comply with the provisions set forth below.
(b) Grant of Performance-Based
Awards. With respect to each
Performance-Based Award granted to a Covered Employee, the
Administrator shall select, within the first 90 days of a
Performance Cycle (or, if shorter, within the maximum period
allowed under Section 162(m) of the Code) the Performance
Criteria for such grant, and the Performance Goals with respect
to each Performance Criterion (including a threshold level of
performance below which no amount will become payable with
respect to such Award). Each Performance-Based Award will
specify the amount payable, or the formula for determining the
amount payable, upon achievement of the various applicable
performance targets. The Performance Criteria established by the
Administrator may be (but need not be) different for each
Performance Cycle and different Performance Goals may be
applicable to Performance-Based Awards to different Covered
Employees.
(c) Payment of Performance-Based
Awards. Following the completion of a
Performance Cycle, the Administrator shall meet to review and
certify in writing whether, and to what extent, the Performance
Goals for the Performance Cycle have been achieved and, if so,
to also calculate and certify in writing the amount of the
Performance-Based Awards earned for the Performance Cycle. The
Administrator shall then determine the actual size of each
Covered Employees Performance-Based Award, and, in doing
so, may reduce or eliminate the amount of the Performance-Based
Award for a Covered Employee if, in its sole judgment, such
reduction or elimination is appropriate.
(d) Maximum Award Payable. The
maximum Performance-Based Award payable to any one Covered
Employee under the Plan for a Performance Cycle is
200,000 Shares (subject to adjustment as provided in
Section 3(c) hereof) or $2,000,000 in the case of a
Performance-Based Award that is a Cash-Based Award.
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SECTION 14.
|
TRANSFERABILITY
OF AWARDS
|
(a) Transferability. Except as
provided in Section 14(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 or pursuant to a qualified
domestic relations order. No Awards shall be 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 14(a),
the Administrator, in its discretion, may provide either in the
Award Document 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 or Deferred Stock Awards) 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 14(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
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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.
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|
SECTION 15.
|
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.
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|
SECTION 16.
|
SECTION 409A
AWARDS
|
To the extent that any Award is determined to constitute
nonqualified deferred compensation within the
meaning of Section 409A (a 409A Award), the
Award shall be subject to such additional rules and requirements
as specified by the Administrator from time to time in order to
comply with Section 409A. In this regard, if any amount
under a 409A Award is payable upon a separation from
service (within the meaning of Section 409A) to a
grantee who is then considered a specified employee
(within the meaning of Section 409A), then no such payment
shall be made prior to the date that is the earlier of
(i) six months and one day after the grantees
separation from service, or (ii) the grantees death,
but only to the extent such delay is necessary to prevent such
payment from being subject to interest, penalties
and/or
additional tax imposed pursuant to Section 409A. Further,
the settlement of any such Award may not be accelerated except
to the extent permitted by Section 409A.
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|
SECTION 17.
|
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.
A-13
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|
SECTION 18.
|
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. Except as provided in Section 3(c)
or 3(d), without prior shareholder approval, 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. To the
extent required under the rules of any securities exchange or
market system on which the Stock is listed, 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
shareholders entitled to vote at a meeting of shareholders.
Nothing in this Section 18 shall limit the
Administrators authority to take any action permitted
pursuant to Section 3(d).
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|
SECTION 19.
|
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 20.
|
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 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 Administrator has
determined, with advice of counsel (to the extent the
Administrator 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 Administrator may require that an individual make such
reasonable covenants, agreements, and representations as the
Administrator, 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
A-14
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) Shareholder Rights. Until
Stock is deemed delivered in accordance with Section 20(b),
no right to vote or receive dividends or any other rights of a
shareholder 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 the Companys
insider trading policies 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.
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|
SECTION 21.
|
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 shareholders at
which a quorum is present. 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 22.
|
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:
DATE APPROVED BY SHAREHOLDERS:
A-15
Dear Shareholder:
Please take note of the important information enclosed with this proxy card. There are a
number of issues related to the management and operation of your Company that require your
immediate attention and approval. These are discussed in detail in the enclosed proxy
materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be voted. Then sign
the card, detach it and return your proxy vote in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders, April 24, 2008.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Progress Software Corporation |
PROGRESS SOFTWARE CORPORATION
14 OAK PARK, BEDFORD, MASSACHUSETTS 01730
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS APRIL 24, 2008
The undersigned shareholder of Progress Software Corporation, revoking all prior proxies,
hereby appoints Joseph W. Alsop, Norman R. Robertson and James D. Freedman, or any of them acting
singly, proxies, with full power of substitution, to vote all shares of Common Stock of Progress
Software Corporation which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Company to be held at the Companys office at 14 Oak Park, Bedford,
Massachusetts on April 24, 2008, at 10:00 A.M., local time, and at any adjournments or
postponements thereof, upon matters set forth in the Notice of Annual Meeting and Proxy Statement
dated March 24, 2008, a copy of which has been received by the undersigned, and in their
discretion, upon any other business that may properly come before the meeting or any adjournments
or postponements thereof. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY. A SHAREHOLDER WISHING TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
DIRECTORS NEED ONLY SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. Attendance of
the undersigned at the meeting or any adjourned or postponed session thereof will not be deemed to
revoke the proxy unless the undersigned shall affirmatively indicate the intention of the
undersigned to vote the shares represented hereby in person.
(Continued and to be signed on the reverse side)
COMMENTS: |
ANNUAL MEETING OF SHAREHOLDERS OF
PROGRESS SOFTWARE CORPORATION
April 24, 2008
Please date, sign and mail your proxy card in the envelope provided as soon as possible.
Please detach along perforated line and mail in the envelope provided.
20633300000000000000 7 042408
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR THE PROPOSALS SET FORTH
HEREIN.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN
BLUE OR BLACK INK AS SHOWN HERE x
2. Election of Directors. FOR AGAINST ABSTAIN
1.
To fix the number of
directors constituting the
full Board of Directors of
the Company at six.
NOMINEES:
FOR ALL NOMINEES 3. To adopt and approve the Progress Software Corporation 2008 O Joseph W.
Alsop Stock Option and Incentive Plan.
O Barry N. Bycoff
4.
To ratify the selection of
Deloitte & Touche LLP as the
WITHHOLD AUTHORITY O Roger J. Heinen
Companys independent
registered public accounting
firm for fis-
FOR ALL NOMINEES O Charles F. Kane
cal year 2008. O David A. Krall
FOR ALL EXCEPT O Michael L. Mark 5. In their discretion, the proxies are authorized to vote
upon any other business as (See instructions below) may properly come before the annual
meeting and any adjournment or postponement of that meeting.
PLEASE COMPLETE, DATE AND SIGN
THIS PROXY ON THE OTHER SIDE AND
MAIL IT IN THE ENCLOSED ENVELOPE
TO ENSURE REPRESENTATION OF YOUR
SHARES. NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED
STATES. PLEASE SIGN EXACTLY AS
NAME(S) APPEAR(S) ON STOCK
CERTIFICATE(S). IF SHAREHOLDER IS
A CORPORATION OR PARTNERSHIP,
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT
PLEASE HAVE AN AUTHORIZED OFFICER SIGN ON BEHALF OF THE and fill in the circle next to each
nominee you wish to withhold, as shown here: CORPORATION OR PARTNERSHIP.
TO INCLUDE ANY COMMENTS, USE THE
COMMENTS BOX ON THE REVERSE SIDE
OF THIS CARD.
To change the address on your account, please check
the box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be
submitted via this method.
Signature of Shareholder Date: Signature of Shareholder Date:
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee
or guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person. |