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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
JANUARY 28, 2005
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
PCTEL, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 000-27115 77-0364943
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(STATE OR OTHER JURISDICTION OF (COMMISSION FILE (IRS EMPLOYER
INCORPORATION) NUMBER) IDENTIFICATION NUMBER)
8725 W. HIGGINS ROAD, SUITE 400
CHICAGO, ILLINOIS 60631
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(773) 243-3000
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act
(17 CFR 240.14a-12(b))
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Acceleration of Stock Options
On January 28, 2005, the Compensation Committee of the Board of
Directors of PCTEL, Inc. approved the acceleration of vesting of all unvested
options to purchase shares of common stock of PCTEL that are held by current
employees, including executive officers, and which have an exercise price per
share equal to or greater than $10.00. Options to purchase 1,647,765 shares of
common stock are subject to this acceleration. The acceleration is effective as
of January 28, 2005, provided that holders of incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, will be
given the election to decline the acceleration of an option if such acceleration
would have the effect of changing the status of such option for federal income
tax purposes from an incentive stock option to a non-qualified stock option.
The acceleration of these options was undertaken to eliminate the
future compensation expense that PCTEL would otherwise recognize in its income
statement with respect to those options upon the effectiveness of FASB Statement
No. 123R ("FAS 123R") in July 2005. Under FAS 123R, the acceleration of these
options will result in PCTEL not being required to recognize share-based
compensation expense of approximately $2,200,000 beginning in the company's
quarter ending September 30, 2005 and ending in the company's quarter ending
March 31, 2008. This amount will instead be reflected in pro forma footnote
disclosure to PCTEL's financial statements for the quarter ending March 31,
2005, as permitted under the transition guidance provided by the Financial
Accounting Standards Board.
In addition, because these options are "underwater", i.e., have
exercise prices in excess of current market value, they are not achieving their
original objectives of incentive compensation and employee retention. PCTEL
believes that the acceleration of these underwater options may have a positive
effect on employee morale.
The following table summarizes the options subject to acceleration:
AGGREGATE NUMBER OF
SHARES ISSUABLE WEIGHTED AVERAGE
UNDER ACCELERATED EXERCISE PRICE PER
OPTIONS SHARE
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EXECUTIVE OFFICERS:
Martin H. Singer 166,667 $11.63
John Schoen 67,000 $11.84
Jeffrey A. Miller 52,000 $11.84
Biju Nair 62,000 $11.84
ALL EXECUTIVE OFFICERS AS A GROUP (4 PERSONS): 347,667 $11.74
ALL OTHER EMPLOYEES: 1,300,098 $11.10
TOTAL: 1,647,765 $11.24
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Executive Officers' Bonus Payments
On January 28, 2005, the Compensation Committee of the Board of
Directors determined the amounts of the cash bonuses to be paid to the executive
officers of PCTEL under the company's 2004 executive bonus plan, and the amount
of the cash bonus to be paid to the Chief Executive Officer of PCTEL under the
2003/2004 stretch plan.
The performance criteria under the 2004 executive bonus plan are
comprised of both corporate goals and personal goals. The bonus amount for each
executive officer is paid in cash and is weighted 60% on the achievement of the
corporate goals and 40% on the achievement of the personal goals. Under the 2004
executive bonus plan, the corporate goals were based on the achievement of
specified levels of annual revenues and annual operating results, as well as the
performance of PCTEL's stock price in comparison with the general performance of
all stocks traded on Nasdaq National Market. The personal goals under the 2004
executive bonus plan differed by officer and were based on a range of individual
management objectives designed to further the company's business strategies in
the areas of acquisitions, marketing and product branding, intellectual property
protection and licensing, business development and corporate governance.
Bonus payments authorized to the executive officers of PCTEL under the
2004 executive bonus plan are as follows:
NAME AND TITLE AMOUNT OF BONUS
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Martin H. Singer $129,940
Chief Executive Officer and Chairman of the Board
John Schoen $84,380
Chief Operating Officer, Chief Financial Officer and
Secretary
Jeffrey A. Miller $58,450
Vice President, Global Sales
Biju Nair $56,440
Vice President and General Manager, Mobility
Solutions Group
The 2003/2004 stretch bonus plan for the Chief Executive Officer is
designed to provide a cash bonus to further the company's long range financial
goals. The criteria for the cash bonus under the 2003/2004 plan, which provides
for a maximum possible bonus of $200,000, are based on the achievement of
specified levels of annual revenues and annual operating results, as well as the
performance of PCTEL's stock price in comparison with the general performance of
all stocks traded on Nasdaq National Market. The bonus payment authorized to be
paid to Martin Singer, the company's Chief Executive Officer, under the
2003/2004 plan was $66,667.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 3, 2005
PCTEL, INC.
By: /s/ John W. Schoen
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John W. Schoen, Chief Financial Officer
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