o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to §240.14a-12 |
þ | No fee required. | |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: | ||
(2) | Aggregate number of securities to which transaction applies: | ||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
(4) | Proposed maximum aggregate value of transaction: | ||
(5) | Total fee paid: | ||
o | Fee paid previously with preliminary materials. | |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: | ||
(2) | Form, Schedule or Registration Statement No.: | ||
(3) | Filing Party: | ||
(4) | Date Filed: | ||
Keith S. Omsberg Corporate Secretary |
10780 Parkridge Boulevard Reston, Virginia 20191 March 18, 2010 |
By | Order of the Board of Directors, |
TIME:
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10:00 a.m. Eastern Time on Thursday, April 8, 2010. | |
PLACE:
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Sheraton Reston Hotel, located at 11810 Sunrise Valley Drive, Reston, Virginia 20191. | |
ITEMS OF BUSINESS:
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(1) To elect seven directors;
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(2) To ratify the selection of McGladrey &
Pullen, LLP as our independent registered public accounting firm
for the fiscal year ending September 30, 2010;
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(3) To act on a proposal to amend Tiers
Restated Certificate of Incorporation in order to change
Tiers name to Official Payments Holdings, Inc.; and
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(4) To transact other business properly coming before
the meeting.
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WHO CAN VOTE:
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You can vote if you were a stockholder of record at the close of business on February 9, 2010. |
INFORMATION ABOUT THE PROXY MATERIALS AND OUR 2010 ANNUAL
MEETING OF STOCKHOLDERS
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1 | |||
GENERAL INFORMATION
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1 | |||
1. WHO IS MAKING THIS SOLICITATION?
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1 | |||
2. WHAT INFORMATION IS CONTAINED IN THESE MATERIALS?
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1 | |||
3. WHEN AND WHERE IS THE ANNUAL MEETING?
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1 | |||
4. WHAT PROPOSALS ARE BEING PRESENTED FOR
STOCKHOLDER VOTE AT THE ANNUAL MEETING?
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1 | |||
5. WHAT OTHER MATTERS MAY ARISE AT THE ANNUAL MEETING?
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2 | |||
6. WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE
ANNUAL MEETING?
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2 | |||
7. WHAT DO I NEED FOR ADMISSION TO THE ANNUAL MEETING?
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2 | |||
8. HOW CAN I FIND TIERS PROXY MATERIALS AND
ANNUAL REPORT ON THE INTERNET?
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2 | |||
9. WHOM SHOULD I CALL IF I HAVE QUESTIONS OR NEED
ADDITIONAL COPIES OF THE PROXY MATERIALS?
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3 | |||
VOTING MECHANICS
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3 | |||
10. WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?
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3 | |||
11. WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN?
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3 | |||
12. HOW CAN I VOTE MY SHARES OF COMMON STOCK?
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3 | |||
13. HOW CAN I REVOKE A PROXY OR CHANGE MY VOTING
INSTRUCTIONS?
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4 | |||
14. WILL MY SHARES BE VOTED IF I DO NOT PROVIDE
INSTRUCTIONS TO MY BROKER?
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4 | |||
15. WHO WILL COUNT THE VOTES?
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4 | |||
VOTING INFORMATION
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4 | |||
16. WHAT ARE THE VOTING CHOICES WHEN VOTING ON
PROPOSAL ONE, THE ELECTION OF DIRECTORS?
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4 | |||
17. WHAT VOTE IS NEEDED TO ELECT THE DIRECTORS?
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4 | |||
18. WHAT ARE THE VOTING CHOICES WHEN VOTING ON
PROPOSAL TWO, THE RATIFICATION OF THE SELECTION OF
MCGLADREY & PULLEN, LLP AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM?
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5 | |||
19. WHAT VOTE IS NEEDED TO RATIFY THE SELECTION OF
MCGLADREY & PULLEN, LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM?
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5 | |||
20. WHAT ARE THE VOTING CHOICES WHEN VOTING ON
PROPOSAL THREE, THE NAME CHANGE PROPOSAL?
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5 | |||
21. WHAT VOTE IS NEEDED TO APPROVE THE NAME CHANGE
PROPOSAL?
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5 | |||
22. HOW MANY VOTES MUST BE PRESENT TO HOLD THE ANNUAL
MEETING?
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6 | |||
23. WHAT IF A QUORUM IS NOT PRESENT AT THE MEETING?
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6 | |||
24. WHAT IF I RETURN MY PROXY CARD BUT DO NOT GIVE
VOTING INSTRUCTIONS?
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6 | |||
25. WHAT IF OTHER MATTERS ARE VOTED ON AT THE MEETING?
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6 | |||
26. WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE
PROXY OR VOTING INSTRUCTION CARD?
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6 | |||
27. WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL
MEETING?
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6 | |||
STOCK OWNERSHIP
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7 | |||
CORPORATE GOVERNANCE MATTERS
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10 | |||
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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13 | |||
PROPOSAL ONE: ELECTION OF DIRECTORS
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15 | |||
REMOVAL OF DIRECTORS
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17 | |||
COMPENSATION COMMITTEE REPORT
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18 | |||
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
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18 |
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COMPENSATION DISCUSSION AND ANALYSIS
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18 | |||
EXECUTIVE COMPENSATION
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28 | |||
SUMMARY COMPENSATION TABLE
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29 | |||
FISCAL 2009 GRANTS OF PLAN-BASED AWARDS
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32 | |||
OUTSTANDING EQUITY AWARDS AT 2009 FISCAL YEAR END
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34 | |||
FISCAL 2009 OPTION EXERCISES AND STOCK VESTED
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36 | |||
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
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36 | |||
DIRECTOR COMPENSATION
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44 | |||
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
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46 | |||
PRINCIPAL ACCOUNTING FEES AND SERVICES
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46 | |||
PROPOSAL TWO: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
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46 | |||
PROPOSAL THREE: AMENDMENT OF RESTATED CERTIFICATE OF
INCORPORATION TO CHANGE THE NAME OF THE COMPANY
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47 | |||
OTHER MATTERS
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47 | |||
ADDITIONAL INFORMATION
|
47 | |||
ANNEX A
|
A-1 | |||
DIRECTIONS TO THE ANNUAL MEETING
|
B-1 |
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1. | WHO IS MAKING THIS SOLICITATION? |
2. | WHAT INFORMATION IS CONTAINED IN THESE MATERIALS? |
3. | WHEN AND WHERE IS THE ANNUAL MEETING? |
4. | WHAT PROPOSALS ARE BEING PRESENTED FOR STOCKHOLDER VOTE AT THE ANNUAL MEETING? |
5. | WHAT OTHER MATTERS MAY ARISE AT THE ANNUAL MEETING? |
6. | WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE ANNUAL MEETING? |
7. | WHAT DO I NEED FOR ADMISSION TO THE ANNUAL MEETING? |
8. | HOW CAN I FIND TIERS PROXY MATERIALS AND ANNUAL REPORT ON THE INTERNET? |
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9. | WHOM SHOULD I CALL IF I HAVE QUESTIONS OR NEED ADDITIONAL COPIES OF THE PROXY MATERIALS? |
10. | WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING? |
11. | WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN? |
12. | HOW CAN I VOTE MY SHARES OF COMMON STOCK? |
| Telephone: If your proxy card or voting instruction card provides instructions for proxy authorization by telephone, follow the instructions on your proxy card or voting instruction card; OR |
| Mail: Mark, sign, and date your proxy card and return it to: Tier Technologies, Inc., c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717; OR |
| In-Person: If you are a record holder or have obtained a valid proxy from the record holder, mark, sign and submit a ballot during the 2010 Annual Meeting of Stockholders on April 8, 2010, at 10:00 a.m. Eastern Time; OR |
| Internet: Follow the instructions for Internet proxy authorization on your proxy card or voting instruction card. |
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13. | HOW CAN I REVOKE A PROXY OR CHANGE MY VOTING INSTRUCTIONS? |
| Giving written notice to Tiers Corporate Secretary at (for notices mailed before March 26, 2010) 10780 Parkridge Boulevard, Suite 400, Reston, Virginia 20191 or 11130 Sunrise Valley Drive, Suite 300, Reston, VA 20191 (for notices mailed on or after March 26, 2010); |
| Submitting a new proxy card bearing a date later than your last proxy card; |
| Following the instructions for Internet proxy authorization that appear on the proxy card; |
| Following the instructions that appear on the proxy card for proxy authorization by telephone; or |
| Attending the annual meeting and voting in person. Attendance at the annual meeting will not, by itself, revoke a proxy. |
14. | WILL MY SHARES BE VOTED IF I DO NOT PROVIDE INSTRUCTIONS TO MY BROKER? |
15. | WHO WILL COUNT THE VOTES? |
16. | WHAT ARE THE VOTING CHOICES WHEN VOTING ON PROPOSAL ONE, THE ELECTION OF DIRECTORS? |
| Vote FOR (in favor of) all of the Boards nominees; |
| WITHHOLD votes from all nominees; or |
| WITHHOLD votes from specific Board nominees; or |
| Provide instructions for cumulating votes for one or more specific Board nominees. |
17. | WHAT VOTE IS NEEDED TO ELECT THE DIRECTORS? |
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18. | WHAT ARE THE VOTING CHOICES WHEN VOTING ON PROPOSAL TWO, THE RATIFICATION OF THE SELECTION OF MCGLADREY & PULLEN, LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM? |
| Vote FOR (in favor of) the ratification; |
| Vote AGAINST the ratification; or |
| ABSTAIN from voting on the ratification. |
19. | WHAT VOTE IS NEEDED TO RATIFY THE SELECTION OF MCGLADREY & PULLEN, LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM? |
20. | WHAT ARE THE VOTING CHOICES WHEN VOTING ON PROPOSAL THREE, THE NAME CHANGE PROPOSAL? |
| Vote FOR (in favor of) the proposal; | |
| Vote AGAINST the proposal; or | |
| ABSTAIN from voting on the proposal. |
21. | WHAT VOTE IS NEEDED TO APPROVE THE NAME CHANGE PROPOSAL? |
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22. | HOW MANY VOTES MUST BE PRESENT TO HOLD THE ANNUAL MEETING? |
23. | WHAT IF A QUORUM IS NOT PRESENT AT THE MEETING? |
24. | WHAT IF I RETURN MY PROXY CARD BUT DO NOT GIVE VOTING INSTRUCTIONS? |
25. | WHAT IF OTHER MATTERS ARE VOTED ON AT THE MEETING? |
26. | WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY OR VOTING INSTRUCTION CARD? |
27. | WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING? |
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Common Stock Beneficially Owned | ||||||||
Name of Beneficial Owner(1)
|
Total Number of Shares | Percent of Class(2) | ||||||
Charles W. Berger
|
140,000 | (3) | * | |||||
John J. Delucca
|
50,000 | (4) | * | |||||
Daniel Donohue
|
2,459,404 | (5) | 13.5 | % | ||||
Morgan P. Guenther
|
140,000 | (3) | * | |||||
Philip Heasley
|
20,002 | (6) | * | |||||
Michael Murphy
|
2,459,404 | (5) | 13.5 | % | ||||
David A. Poe
|
6,668 | (3) | * | |||||
Zachary Sadek
|
1,799,321 | (7) | 9.9 | % | ||||
Ronald W. Johnston
|
81,666 | (8) | * | |||||
Keith Kendrick
|
30,000 | (9) | * | |||||
Keith S. Omsberg
|
37,500 | (10) | * | |||||
Ronald L. Rossetti
|
434,500 | (11) | 2.3 | % | ||||
Nina K. Vellayan
|
53,564 | (12) | * | |||||
All directors and executive officers as a group (13 persons)
|
5,252,625 | (13) | 27.6 | % |
* | Less than 1% | |
(1) | Address: 10780 Parkridge Blvd, Suite 400, Reston, Virginia 20191, unless otherwise specified. | |
(2) | The percentages shown are based on 18,150,965 shares of common stock outstanding as of February 23, 2010. | |
(3) | Consists entirely of shares issuable upon the exercise of options exercisable on or before April 24, 2010. | |
(4) | Includes 40,000 shares issuable upon the exercise of options exercisable on or before April 24, 2010. | |
(5) | Address: 191 North Wacker Drive, Suite 1685, Chicago, Illinois 60606. Based solely on information contained in a Schedule 13D/A filed with the SEC by Discovery Group I, LLC on March 2, 2010. Discovery Group I, LLC is the sole general partner of Discovery Equity Partners, L.P. Discovery Equity Partners, L.P. beneficially owns 2,109,667 shares of common stock and Discovery Group I, LLC beneficially owns 2,459,404 shares of common stock. Daniel J. Donoghue and Michael R. Murphy are the sole managing members of Discovery Group I, LLC and may be deemed to beneficially own 2,459,404 shares of common stock. | |
(6) | Includes 10,002 shares issuable upon the exercise of options exercisable on or before April 24, 2010. | |
(7) | Address: 265 Franklin Street, 18th Floor, Boston, Massachusetts 02110. Based solely on information contained in a Schedule 13D/A filed with the SEC on January 15, 2010 by Giant Investment, LLC, (Giant); Parthenon Investors II, L.P. (Parthenon); PCap Partners II, LLC (PCap Partners); PCap II, LLC (PCap II); John C. Rutherford; and Ernest K. Jacquet (collectively, the Parthenon Group). Parthenon is a managing member of Giant, PCap Partners is a general partner of Parthenon, and PCap II is a managing member of PCap Partners. Giant directly beneficially owns 1,799,321 shares of common stock. As parents of Giant, Parthenon, PCap Partners and PCap II may be deemed to beneficially own their proportional interest in the shares of common stock directly and beneficially owned by Giant, comprising 1,748,401 shares of |
7
common stock. John C. Rutherford and Ernest K. Jacquet are control persons of various entities indirectly investing in Giant and may be deemed to beneficially own a proportional interest in the shares of common stock owned by Giant, comprising 1,799,321 shares of common stock. In addition, Exhibit 99.2 to a Schedule 13D/A filed by the Parthenon Group on January 6, 2009 indicated that Mr. Sadek, as a Vice President of PCap Managers LLC, an affiliate of Giant, may be deemed to indirectly beneficially own all of the shares directly beneficially owned by Giant, but that Mr. Sadek disclaims any such beneficial ownership. | ||
(8) | Consists entirely of shares issuable upon the exercise of options exercisable on or before April 24, 2010. | |
(9) | Consists entirely of shares issuable upon the exercise of options exercisable on or before April 24, 2010. | |
(10) | Consists entirely of shares issuable upon the exercise of options exercisable on or before April 24, 2010. | |
(11) | Includes 385,000 shares issuable upon the exercise of options exercisable on or before April 24, 2010. | |
(12) | Includes 40,000 shares issuable upon the exercise of options exercisable on or before April 24, 2010. | |
(13) | Includes 910,836 shares issuable upon the exercise of options exercisable on or before April 24, 2010. |
Weighted- |
||||||||||||
Average Exercise |
Number of |
|||||||||||
Number of Securities |
Price of |
Securities |
||||||||||
to be Issued Upon |
Outstanding |
Remaining Available |
||||||||||
Exercise of |
Options, |
for Future Issuance |
||||||||||
Outstanding Options, |
Warrants and |
Under Equity |
||||||||||
Plan Category
|
Warrant and Rights | Rights ($) | Compensation Plans | |||||||||
Equity compensation plans
|
||||||||||||
Approved by security holders
|
2,359 | $ | 7.86 | 1,353 | ||||||||
Not approved by security holders
|
| | | |||||||||
Total
|
2,359 | $ | 7.86 | 1,353 | ||||||||
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Common Stock Beneficially Owned | ||||||||
Total Number of |
Percent of |
|||||||
Name of Beneficial Owner
|
Shares | Class(1) | ||||||
Discovery Group I, LLC(2)
|
2,459,404 | 13.5 | % | |||||
Wells Fargo & Company(3)
|
2,109,746 | 11.6 | % | |||||
Giant Investment, LLC(4)
|
1,799,321 | 9.9 | % | |||||
Heartland Advisors, Inc.(5)
|
1,717,474 | 9.5 | % | |||||
Dimensional Fund Advisors(6)
|
1,450,931 | 8.0 | % |
(1) | The percentages shown are based on 18,150,965 shares of common stock outstanding as of February 23, 2010. | |
(2) | Address: 191 North Wacker Drive, Suite 1685, Chicago, Illinois 60606. Based solely on information contained in a Schedule 13D/A filed with the SEC by Discovery Group I, LLC on March 2, 2010. Discovery Group I, LLC is the sole general partner of Discovery Equity Partners, L.P. Discovery Equity Partners, L.P. beneficially owns 2,109,667 shares of common stock and Discovery Group I, LLC beneficially owns 2,459,404 shares of common stock. Daniel J. Donoghue and Michael R. Murphy, each of whom is a member of our Board of Directors, are the sole managing members of Discovery Group I, LLC and may be deemed to beneficially own 2,459,404 shares of common stock. | |
(3) | Address: For Wells Fargo & Company, 420 Montgomery Street, San Francisco, California 94104; for Wells Capital Management Incorporated, 525 Market Street, 10th Floor, San Francisco, California 94105. Based solely on information contained in a Schedule 13G/A filed with the SEC on January 26, 2009 by Wells Fargo & Company and its subsidiary, Wells Capital Management Incorporated. This table reflects the shares of common stock owned by Wells Fargo & Company and Wells Capital Management Incorporated as of December 31, 2009. | |
(4) | Address: 265 Franklin Street, 18th Floor, Boston, Massachusetts 02110. Based solely on information contained in a Schedule 13D/A filed with the SEC on January 15, 2010 by Giant Investment, LLC, (Giant); Parthenon Investors II, L.P. (Parthenon); PCap Partners II, LLC (PCap Partners); PCap II, LLC (PCap II); John C. Rutherford; and Ernest K. Jacquet (collectively, the Parthenon Group). Parthenon is a managing member of Giant, PCap Partners is a general partner of Parthenon, and PCap II is a managing member of PCap Partners. Giant directly beneficially owns 1,799,321 shares of common stock. As parents of Giant, Parthenon, PCap Partners and PCap II may be deemed to beneficially own their proportional interest in the shares of common stock directly and beneficially owned by Giant, comprising 1,748,401 shares of common stock. John C. Rutherford and Ernest K. Jacquet are control persons of various entities indirectly investing in Giant and may be deemed to beneficially own a proportional interest in the shares of common stock owned by Giant, comprising 1,799,321 shares of common stock. In addition, Exhibit 99.2 to a Schedule 13D/A filed by the Parthenon Group on January 6, 2009 indicated that Mr. Sadek, who is a member of our Board of directors, may be deemed to indirectly beneficially own all of the shares directly beneficially owned by Giant due to his position as a Vice President of PCap Managers LLC, an affiliate of Giant, but that Mr. Sadek disclaims any such beneficial ownership. | |
(5) | Address: 789 North Water Street, Milwaukee, Wisconsin 53202. Based solely on information contained in a Schedule 13G/A filed with the SEC by Heartland Advisors, Inc. on February 10, 2010. This table reflects the shares of common stock that may be deemed beneficially owned by (1) Heartland Advisors, Inc., by virtue of its investment discretion and voting authority granted by certain clients, and (2) William J. Nasgovitz, by virtue of his control of Heartland Advisors, Inc., in each case as of December 31, 2009. Mr. Nasgovitz disclaims beneficial ownership of these shares. | |
(6) | Address: Palisades West, Building One, 6300 Bee Cave Road, Austin, Texas 78746. Based on information contained in a Schedule 13G/A filed with the SEC by Dimensional Fund Advisors LP on February 8, 2010. In its role as an investment advisor, sub-adviser and/or manager to certain investment companies, trusts and |
9
accounts (the Funds), Dimensional and/or its subsidiaries (collectively, Dimensional) possesses investment and/or voting power over the shares shown in the table above, and may be deemed to be the beneficial owner of such shares. However, all shares reported above are owned by the Funds, and Dimensional disclaims beneficial ownership of such shares. This table reflects the shares of common stock deemed beneficially owned by Dimensional as of December 31, 2009. |
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| financial literacy, demonstrated reputation for integrity, and the ability to exercise sound business judgment; | |
| high personal and professional ethics; | |
| understanding of the fiduciary responsibilities required as a member of the Board and the commitment, time, and ability to meet these responsibilities; and | |
| an appropriate professional background providing an understanding of our technology, technology development, finance, sales, and marketing. |
| Any related person transaction proposed to be entered into by Tier must be reported to our General Counsel. | |
| The Governance and Nominating Committee shall review and approve all related person transactions, prior to effectiveness or consummation of the transaction, whenever practicable. | |
| If the General Counsel determines that advance approval of a related person transaction is not practicable under the circumstances, the Governance and Nominating Committee shall review and, in its discretion, may ratify the related person transaction at the next Governance and Nominating Committee meeting, or at the next meeting following the date that the related person transaction comes to the attention of the General Counsel; provided, however, that the General Counsel may present a related person transaction arising in the time period between meetings of the Governance and Nominating Committee to the Chair of the Governance and Nominating Committee, who shall review and may approve the related person transaction, subject to ratification by the Governance and Nominating Committee at the next meeting. | |
| Previously approved transactions of an ongoing nature shall be reviewed by the Governance and Nominating Committee annually to ensure that such transactions have been conducted in accordance with the previous approval granted by the Governance and Nominating Committee, if any, and that all required disclosures regarding the related person transaction are made. |
| the related persons interest in the transaction, the dollar value of the amount involved, and the dollar value of the amount of the related persons interest, without regard to profit or loss; | |
| whether the transaction was undertaken in the ordinary course of business; | |
| whether the transaction with the related person is proposed to be, or was, entered into on terms no less favorable to us than terms that could have been reached with an unrelated third party; |
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| the purpose of, and potential benefits to us of, the transaction; and | |
| any other information regarding the related person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction. |
1. | interests arising solely from the related persons position as an executive officer of another entity (whether or not the person is also a director of such entity) that is a participant in the transaction, where (a) the related person and all other related persons own in the aggregate less than a 10% equity interest in such entity, (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction with the Company and do not receive any special benefits as a result of the transaction and (c) the amount involved in the transaction equals less than the greater of $200,000 or 5% of the annual gross revenues of the company receiving payment under the transaction; | |
2. | a transaction that is specifically contemplated by provisions of our charter or bylaws; and | |
3. | transactions that do not constitute related person transactions pursuant to the instructions to the SECs related person transaction disclosure rule. |
Number of Members: 4 | Functions: |
Members: Charles W. Berger (Chair) John J. Delucca (Vice Chair) Daniel J. Donoghue Zachary F. Sadek (from March 2009) Samuel Cabot III (through March 2009) |
Selects the independent registered public accounting firm to
audit Tiers books and records, subject to stockholder
ratification, and determines the compensation of the independent
registered public accounting firm. At least annually, reviews a report by the independent registered public accounting firm describing: internal quality control procedures, |
13
any issues raised by an internal or peer quality control review, and any investigations by regulatory authorities. | ||
Number of Meetings in Fiscal 2009: 7 | Consults with the independent registered public accounting firm, reviews and approves the scope of their audit, and reviews independence and performance. Also reviews any proposed engagement between Tier and the independent registered public accounting firm and approves in advance any such engagement, if appropriate. | |
Reviews internal controls, accounting practices, and financial reporting, including the results of the annual audit and the review of the interim financial statements, with management and the independent registered public accounting firm. | ||
Discusses earnings releases and guidance provided to the public. | ||
As appropriate, obtains advice and assistance from outside legal, accounting, or other advisors. | ||
Prepares a report of the Audit Committee to be included in our proxy statement. | ||
Assesses annually the adequacy of the Audit Committee Charter. | ||
Reports to the Board about these matters. |
Number of Members: 3 | Functions: | |
Members: Philip G. Heasley (Chair) Morgan P. Guenther Michael R. Murphy (from March 2009) Samuel Cabot III (through March 2009) |
Reviews and approves the compensation of our Chief Executive
Officer and other executive officers. Reviews executive bonus plan allocations. Oversees and advises the Board on the adoption of policies that govern our compensation programs. |
|
Number of Meetings in Fiscal 2009: 8 | Oversees the administration of our equity-based compensation and other benefit plans. | |
Approves grants of stock options and stock awards to our officers and employees. |
Number of Members: 4 | Functions: | |
Members: Morgan P. Guenther (Chair) John J. Delucca Philip G. Heasley Michael R. Murphy (from March 2009) |
Interviews, evaluates, and recommends individuals for membership
on the Board and its committees. Evaluates and recommends, where appropriate, whether a member of the Board qualifies as independent within the meaning of the applicable NASDAQ rules. Recommends guidelines and responsibilities relating to corporate governance for adoption by the Board. |
|
Number of Meetings in Fiscal 2009: 9 | Reviews, approves, or ratifies related person transactions. |
14
Evaluates and recommends director compensation. |
Number of Members: 3 | Functions: | |
Members: David A. Poe (Chair) Philip G. Heasley Zachary F. Sadek (from March 2009) |
Identifies and evaluates security risks. Implements safeguards and programs on data security integrity and migration of security risks. Works with management to enhance current, and develop new, technical policies and procedures. |
|
Number of Meetings in Fiscal 2009: 3 |
15
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17
| If the holders of 17,499,999 shares voted in favor of the directors removal, and the holders of 2,500,001 shares voted against removal, then the director would not be removed. The director would not be removed because the total number of possible votes that could be cast in the election of a seven member Board would be 140,000,000, with the top seven vote recipients being elected to the Board, meaning that 17,500,001 would be the threshold number of votes necessary to secure a seat on the Board in a contested election (and, therefore, to defeat a proposal to remove a director). Since the holders of 2,500,001 shares would be entitled to cast 17,500,007 votes, the director would remain on the Board. | |
| If the holders of 17,500,001 shares voted in favor of the directors removal, and the holders of 2,499,999 shares voted against removal, then the director would be removed. The director would be removed because the holders of 2,499,999 shares would be entitled to cast 17,499,993 votes, falling 8 votes short of the number of votes that would be required to secure a seat on the Board in a contested election (and, therefore, to defeat a proposal to remove a director). |
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| attract, retain, and motivate talented employees; | |
| support business strategies that promote sustained growth and development; | |
| reward the achievement of business results through the delivery of competitive pay and performance-based incentive programs; and | |
| link executives goals with the interests of shareholders by tying a portion of compensation to our stock. |
19
| reviewing and approving the compensation for our Chief Executive Officer and other executive officers; | |
| reviewing executive bonus plan allocations; | |
| overseeing and advising the Board on the adoption of policies that govern our compensation programs; and | |
| approving grants of stock options and other stock awards to our executive officers. |
20
21
Base Salary Rate by |
||||||||||||
fiscal year
|
% Change |
|||||||||||
2008
|
2009
|
2008 to 2009
|
||||||||||
Ronald L. Rossetti
|
$ | (1 | ) | $ | 400,000 | (1 | ) | |||||
Chief Executive Officer and Chairman of the Board
|
||||||||||||
Nina K. Vellayan(2)
|
| 275,000 | N/A | |||||||||
Executive Vice President, Chief Operating Officer
|
||||||||||||
Ronald W. Johnston
|
275,000 | 272,000 | (3) | (1 | )% | |||||||
Senior Vice President, Chief Financial Officer
|
||||||||||||
Keith S. Kendrick
|
265,000 | 265,000 | 0 | % | ||||||||
Senior Vice President, Strategic Marketing
|
||||||||||||
Keith S. Omsberg
|
190,000 | 190,000 | 0 | % | ||||||||
Vice President, General Counsel and Corporate Secretary
|
(1) | Pursuant to Mr. Rossettis employment agreement signed April 30, 2008, Mr. Rossettis base salary was reduced from $600,000 to $400,000 per annum, a reduction of 33%, effective May 1, 2008. | |
(2) | Ms. Vellayan joined Tier in October 2008. | |
(3) | Mr. Johnston voluntarily reduced his base salary from $275,000 to $272,000 for fiscal year 2009, effective January 2009. |
| align the management teams financial interests with those of our shareholders; | |
| support a performance-oriented environment that rewards business unit and Tiers overall results; | |
| attract, motivate, and retain key management critical to Tiers long-term success; and | |
| align compensation with Tiers business strategy, values, and management initiatives. |
22
Threshold: |
Target: |
Maximum: |
||||||||||
EBITDA of |
EBITDA of |
EBITDA of |
||||||||||
Name
|
$0.75 Million | $1.0 Million | $1.25 Million | |||||||||
Ronald L. Rossetti
|
$ | 300,000 | $ | 400,000 | $ | 500,000 | ||||||
Nina K. Vellayan
|
137,500 | 206,250 | 275,000 | |||||||||
Ronald W. Johnston
|
137,500 | 165,000 | 206,250 | |||||||||
Keith S. Kendrick
|
132,500 | 159,000 | 198,750 | |||||||||
Keith S. Omsberg
|
19,000 | 28,500 | 38,000 |
(1) | The following table provides detail on the basis of the estimated payout levels: |
23
Name
|
Threshold | Target | Maximum | |||||||||
Ronald L. Rossetti
|
75 | % | 100 | % | 125 | % | ||||||
Nina K. Vellayan
|
50 | % | 75 | % | 100 | % | ||||||
Ronald W. Johnston(a)
|
50 | % | 60 | % | 75 | % | ||||||
Keith S. Kendrick
|
50 | % | 60 | % | 75 | % | ||||||
Keith S. Omsberg
|
10 | % | 15 | % | 20 | % |
(a) | Mr. Johnstons estimated payout amounts were calculated on a base salary of $275,000, which represented his base salary per his employment agreement. |
2009 Payout | ||||||||
Named Executive Officer
|
EIP | Bonus | ||||||
Ronald L. Rossetti
|
$ | 400,000 | $ | | ||||
Nina K. Vellayan
|
206,250 | 75,000 | ||||||
Ronald W. Johnston
|
165,000 | | ||||||
Keith S. Kendrick(1)
|
59,625 | 132,500 | ||||||
Keith S. Omsberg
|
28,500 | | ||||||
Total incentive payout
|
$ | 859,375 | $ | 207,500 | ||||
(1) | In accordance with the terms of his employment agreement, Mr. Kendricks EIP award was reduced by $99,375, the amount of his guaranteed bonus that was attributed to fiscal year 2009, from his target level of $159,000. |
24
| any person, entity, or affiliated group becoming the beneficial owner or owners of more than 50% of the outstanding equity securities of Tier, or otherwise becoming entitled to vote shares representing more than 50% of the undiluted total voting power of our then-outstanding securities eligible to vote to elect members of the Board; | |
| a consolidation or merger (in one transaction or a series of related transactions) of Tier pursuant to which the holders of our equity securities immediately prior to such transaction or series of transactions would not be the holders immediately after such transaction or series of related transactions of more than 50% of the securities eligible to vote to elect members of the Board of the entity surviving such transaction or series of related transactions; or |
25
| the sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of Tier. |
Restricted |
Performance |
Stock |
||||||||||
Named Executive Officer
|
Stock Units(1) | Stock Units(2) | Options(3) | |||||||||
Ronald L. Rossetti
|
150,000 | | | |||||||||
Nina K. Vellayan
|
| 180,000 | 200,000 | |||||||||
Ronald W. Johnston
|
| 150,000 | 75,000 | |||||||||
Keith S. Kendrick
|
| 100,000 | 50,000 | |||||||||
Keith S. Omsberg
|
| 50,000 | 15,000 |
(1) | Granted to Mr. Rossetti under his EVA Plan. These RSUs will be earned upon Tiers achievement and maintenance for a period of 60 days of a Share Price Performance Target of $8.00 per share. Unless vesting is accelerated under the circumstances discussed under Potential Payments Upon Termination or Change in Control, any RSUs that are earned due to the achievement and maintenance of Share Price Performance Targets will vest on April 30, 2011. RSUs are payable in shares unless no shares are available under a shareholder approved plan, in which case they are payable in cash. | |
(2) | Unless vesting is accelerated under the circumstances discussed under Potential Payments Upon Termination or Change in Control, any PSUs that are awarded due to the achievement and maintenance of Share Price Performance Targets will vest on December 4, 2011. PSUs are payable in cash unless shares are available under a shareholder approved plan, in which case they may be payable in the form of shares at the option of the Company. | |
(3) | Unless vesting is accelerated under the circumstances discussed under Potential Payments Upon Termination or Change in Control, options vest over five years, with 20% of the underlying shares vesting on each of the first five anniversaries of the grant date. |
26
| any person, entity or affiliated group becoming the beneficial owner or owners of more than 50% of the outstanding equity securities of Tier, or otherwise becoming entitled to vote shares representing more than 50% of the undiluted total voting power of our then-outstanding securities eligible to vote to elect members of the Board; | |
| a consolidation or merger (in one transaction or a series of related transactions) of Tier pursuant to which the holders of our equity securities immediately prior to such transaction or series of transactions would not be the holders immediately after such transaction or series of related transactions of more than 50% of the securities eligible to vote to elect members of the Board of the entity surviving such transaction or series of related transactions; |
27
| the sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of Tier; | |
| the dissolution or liquidation of Tier; or | |
| the date on which we (i) consummate a going private transaction pursuant to Section 13 and Rule 13e-3 of the Exchange Act, or (ii) no longer have a class of equity securities registered under the Exchange Act . |
| any person, entity or affiliated group becoming the beneficial owner or owners of more than 35% of the outstanding equity securities of Tier, or otherwise becoming entitled to vote shares representing more than 35% of the undiluted total voting power of our then-outstanding securities eligible to vote to elect members of the Board; | |
| a consolidation or merger (in one transaction or a series of related transactions) of Tier pursuant to which the holders of our equity securities immediately prior to such transaction or series of related transactions would not be the holders immediately after such transaction or series of related transactions of at least 65% of the securities eligible to elect members of the board of directors of the entity surviving such transaction or series of related transactions; or | |
| the sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of Tier. |
28
Non-Equity |
||||||||||||||||||||||||||||||||
Incentive Plan |
All Other |
|||||||||||||||||||||||||||||||
Name and Principal |
Salary |
Bonus |
Stock Awards |
Option Awards |
Compensation |
Compensation |
Total |
|||||||||||||||||||||||||
Position
|
Year | ($) | ($)(1) | ($)(2) | ($)(2) | ($)(3) | ($)(4) | ($) | ||||||||||||||||||||||||
Ronald L. Rossetti
|
2009 | $ | 400,000 | $ | | $ | 513,497 | $ | | $ | 400,000 | $ | 228,061 | $ | 1,541,558 | |||||||||||||||||
Chief Executive Officer,
|
2008 | 589,231 | 390,513 | 264,583 | | | 278,363 | 1,522,690 | ||||||||||||||||||||||||
Chairman of the Board
|
2007 | 600,000 | 600,000 | | 119,375 | | 230,710 | 1,550,085 | ||||||||||||||||||||||||
Nina K. Vellayan
|
2009 | 267,596 | 75,000 | 219,180 | 47,215 | 206,250 | 8,028 | 823,269 | ||||||||||||||||||||||||
Executive Vice President,
Chief Operating Officer |
||||||||||||||||||||||||||||||||
Ronald W. Johnston(5)
|
2009 | 272,692 | | 182,650 | 232,971 | 165,000 | 8,180 | 861,493 | ||||||||||||||||||||||||
Senior Vice President,
|
2008 | 172,158 | 68,750 | | 58,326 | | 4,943 | 304,177 | ||||||||||||||||||||||||
Chief Financial Officer
|
||||||||||||||||||||||||||||||||
Keith S. Kendrick
|
2009 | 265,000 | 132,500 | 121,767 | 72,783 | 59,625 | 95,405 | 747,080 | ||||||||||||||||||||||||
Senior Vice President,
|
2008 | 68,288 | | | 18,018 | | 42,953 | 129,259 | ||||||||||||||||||||||||
Strategic Marketing
|
||||||||||||||||||||||||||||||||
Keith S. Omsberg
|
2009 | 190,000 | | 60,883 | 47,845 | 28,500 | 4,385 | 331,613 | ||||||||||||||||||||||||
Vice President, General
|
2008 | 188,000 | 92,500 | | 50,706 | | 5,585 | 336,791 | ||||||||||||||||||||||||
Counsel and Secretary
|
(1) | Reflects the following bonus payouts for fiscal years 2009, 2008 and 2007: |
Employment |
||||||||||||||||
Name
|
Year | Agreement | Discretionary | Total Bonus Payout | ||||||||||||
Ronald L. Rossetti
|
2008 | $ | 166,667 | $ | 223,846 | $ | 390,513 | |||||||||
2007 | 600,000 | | 600,000 | |||||||||||||
Nina K. Vellayan
|
2009 | 75,000 | | 75,000 | ||||||||||||
Ronald W. Johnston
|
2008 | 68,750 | | 68,750 | ||||||||||||
Keith S. Kendrick
|
2009 | 132,500 | | 132,500 | ||||||||||||
Keith S. Omsberg
|
2009 | | | | ||||||||||||
2008 | | 92,500 | 92,500 |
(2) | The amounts included in these columns reflect the dollar amount recognized as an expense for financial statement reporting purposes in fiscal years 2009, 2008 and 2007 for stock awards (consisting of RSUs in the case of Mr. Rossetti and PSUs in the case of the other named executives) and stock option awards, calculated in accordance with U.S. GAAP, excluding any estimate of forfeitures. Accordingly, the columns include amounts relating to awards granted during and prior to the year indicated. The following table summarizes the amounts shown in the Stock Awards and Option Awards columns and the amount included for each such award for fiscal year 2009. Assumptions used in the calculation of these amounts and the amounts for fiscal year 2009 are included in footnote 14 to the audited consolidated financial statements included in our annual report on Form 10-K for fiscal year 2009, as amended. |
29
Stock Awards | Option Awards | |||||||||||||||||||||||
Total Number of |
Total Number of |
|||||||||||||||||||||||
Shares Underlying |
Amount Included in |
Shares Underlying |
Amount Included in |
|||||||||||||||||||||
Name
|
Date of Award | Stock Awards (#) | Fiscal 2009 ($) | Date of Award | Options Awarded (#) | Fiscal 2009 ($) | ||||||||||||||||||
Ronald L. Rossetti
|
12/4/08 | 150,000 | $ | 102,222 | | | $ | | ||||||||||||||||
4/30/08 | 550,000 | 411,275 | | |||||||||||||||||||||
513,497 | | |||||||||||||||||||||||
Nina K. Vellayan
|
12/4/08 | 180,000 | 219,180 | 12/4/08 | 200,000 | 47,215 | ||||||||||||||||||
Ronald W. Johnston
|
12/4/08 | 150,000 | 182,650 | 12/4/08 | 75,000 | 17,706 | ||||||||||||||||||
7/1/08 | 200,000 | 215,265 | ||||||||||||||||||||||
232,971 | ||||||||||||||||||||||||
Keith S. Kendrick
|
12/4/08 | 100,000 | 121,767 | 12/30/08 | 50,000 | 11,409 | ||||||||||||||||||
6/30/08 | 100,000 | 61,374 | ||||||||||||||||||||||
72,783 | ||||||||||||||||||||||||
Keith S. Omsberg
|
12/4/08 | 50,000 | 60,883 | 12/4/08 | 15,000 | 3,541 | ||||||||||||||||||
12/10/07 | 20,000 | 13,457 | ||||||||||||||||||||||
10/1/07 | 30,000 | 21,912 | ||||||||||||||||||||||
9/13/06 | 10,000 | 5,882 | ||||||||||||||||||||||
11/1/04 | 3,000 | 2,481 | ||||||||||||||||||||||
12/1/03 | 3,000 | 572 | ||||||||||||||||||||||
47,845 | ||||||||||||||||||||||||
(3) | Reflects cash payouts for fiscal year 2009 under the Executive Incentive Plan. |
Total Non-Equity Incentive |
||||||||||||
Name
|
Year | Incentive Plan | Payout | |||||||||
Ronald L. Rossetti
|
2009 | EIP | $ | 400,000 | ||||||||
Nina K. Vellayan
|
2009 | EIP | 206,250 | |||||||||
Ronald W. Johnston
|
2009 | EIP | 165,000 | |||||||||
Keith S. Kendrick
|
2009 | EIP | 59,625 | |||||||||
Keith S. Omsberg
|
2009 | EIP | 28,500 |
(4) | Consists of: |
| the aggregate incremental cost to Tier of providing perquisites and other personal benefits; | |
| Company matching contributions under 401(k) plans; and | |
| tax reimbursement payments relating to income tax liability incurred by the applicable executive as a result of the Companys payment for the perquisites described below. |
30
Tax |
Total all Other |
|||||||||||||||||||
Name
|
Year | Perquisites(a) | 401(k) | Reimbursement | Compensation | |||||||||||||||
Ronald L. Rossetti
|
2009 | $ | 116,802 | $ | 7,350 | $ | 103,909 | $ | 228,061 | |||||||||||
2008 | 183,338 | 6,900 | 88,125 | 278,363 | ||||||||||||||||
2007 | 191,435 | 6,750 | 32,525 | 230,710 | ||||||||||||||||
Nina K. Vellayan
|
2009 | | 8,028 | | 8,028 | |||||||||||||||
Ronald W. Johnston
|
2009 | | 8,180 | | 8,180 | |||||||||||||||
2008 | | 4,943 | | 4,943 | ||||||||||||||||
Keith S. Kendrick
|
2009 | 87,455 | 7,950 | | 95,405 | |||||||||||||||
2008 | 35,986 | 1,835 | 5,132 | 42,953 | ||||||||||||||||
Keith S. Omsberg
|
2009 | | 4,385 | | 4,385 | |||||||||||||||
2008 | | 5,585 | | 5,585 |
(a) | See Perquisites and Benefits in Compensation Discussion and Analysis beginning on page 26 for a discussion of perquisites provided to executives. |
| expenses for corporate apartments located near our corporate headquarters in Reston, Virginia, including utilities; | |
| expenses for local transportation while the executive is located in Reston and air and ground transportation, meals and lodging for travel by the executive to and from his home to our corporate headquarters in Reston; and | |
| legal consultation fees relating to negotiation and review of the executives employment agreement. |
Corporate |
Legal |
|||||||||||||||||||
Name
|
Year | Apartment* | Travel* | Consultation* | Total | |||||||||||||||
Ronald L. Rossetti
|
2009 | $ | 52,459 | $ | 64,343 | $ | | $ | 116,802 | |||||||||||
2008 | 39,096 | 113,431 | 30,811 | 183,338 | ||||||||||||||||
2007 | 41,232 | 130,375 | ** | 19,828 | 191,435 | |||||||||||||||
Keith S. Kendrick
|
2009 | 28,221 | 59,234 | | 87,455 | |||||||||||||||
2008 | 8,310 | 19,371 | 8,305 | 35,986 |
* | Amounts reflect aggregate incremental cost to the Company, which is equal to the Companys out-of-pocket costs for these perquisites. |
** | Includes travel by chartered private jet for business meeting which Mr. Rossetti attended. Total cost was $27,295 and is split equally between Mr. Rossetti and a former executive who attended the meeting. |
(5) | Mr. Johnston served as interim Chief Financial Officer from April 2008 to June 2008. |
31
Grant |
||||||||||||||||||||||||||||||||||||||||||||
Closing |
Date |
|||||||||||||||||||||||||||||||||||||||||||
All Other |
Market |
Fair |
||||||||||||||||||||||||||||||||||||||||||
Option |
Exercise or |
Price |
Value of |
|||||||||||||||||||||||||||||||||||||||||
Awards: |
Base Price |
of Common |
Stock |
|||||||||||||||||||||||||||||||||||||||||
Estimated Possible Payouts |
Estimated Future Payouts |
Number of |
of |
Stock |
and |
|||||||||||||||||||||||||||||||||||||||
Under Non-Equity Incentive Plan Awards(1) | under Equity Incentive Plan Awards(1) |
Securities |
Option |
on Date of |
Option |
|||||||||||||||||||||||||||||||||||||||
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
Underlying |
Awards |
Grant |
Awards |
|||||||||||||||||||||||||||||||||||
Name
|
Grant Date | ($)(2) | ($)(3) | ($)(4) | (#) | (#) | (#) | Options (#) | ($/sh)(5) | ($/sh)(5) | ($)(6) | |||||||||||||||||||||||||||||||||
Ronald L. Rossetti
|
$ | 300,000 | $ | 400,000 | $ | 500,000 | | | | | $ | | $ | | $ | | ||||||||||||||||||||||||||||
12/4/2008 | | | | 150,000 | (7) | (9 | ) | 700,000 | (10) | | | | | |||||||||||||||||||||||||||||||
Nina K. Vellayan
|
137,500 | 206,250 | 275,000 | | | | | | | | ||||||||||||||||||||||||||||||||||
12/4/2008 | | | | 45,000 | (8) | (9 | ) | 180,000 | (11) | 200,000 | (12) | 4.25 | 4.34 | 850,000 | ||||||||||||||||||||||||||||||
Ronald W. Johnston
|
137,500 | 165,000 | 206,250 | | | | | | | | ||||||||||||||||||||||||||||||||||
12/4/2008 | | | | 37,500 | (8) | (9 | ) | 150,000 | (11) | 75,000 | (13) | 4.25 | 4.34 | 318,750 | ||||||||||||||||||||||||||||||
Keith S. Kendrick
|
132,500 | 159,000 | 198,750 | | | | | | | | ||||||||||||||||||||||||||||||||||
12/4/2008 | | | | 25,000 | (8) | (9 | ) | 100,000 | (11) | | | | | |||||||||||||||||||||||||||||||
12/30/2008 | | | | | | | 50,000 | (13) | 4.73 | 4.93 | 236,500 | |||||||||||||||||||||||||||||||||
Keith S. Omsberg
|
19,000 | 28,500 | 38,000 | | | | | | | | ||||||||||||||||||||||||||||||||||
12/4/2008 | | | | 12,500 | (8) | (9 | ) | 50,000 | (11) | 15,000 | (13) | 4.25 | 4.34 | 63,750 |
(1) | For additional information concerning performance metrics and payouts under non-equity and equity incentive plan awards, see pages 23 through 26. |
(2) | The threshold amount represents the amounts payable to the executive if we met our corporate performance threshold goal of EBITDA of $750,000 for fiscal 2009 under the Executive Incentive Plan. | |
(3) | The target amount represents the amounts payable to the executive if we met our corporate performance target goal of EBITDA of $1.0 million for fiscal 2009 under the Executive Incentive Plan. | |
(4) | The maximum amount represents the amounts payable to the executive if we met our corporate performance stretch goal of EBITDA of $1.25 million for fiscal 2009 under the Executive Incentive Plan. During fiscal year 2009, we exceeded this stretch goal. However, the Compensation Committee, on managements recommendation, determined that EIP payouts for fiscal year 2009 would be determined as if the target EBITDA, rather than the maximum EBITDA, had been achieved, in order to make additional funds available for bonuses payable to individuals other than our executive officers. | |
(5) | The exercise price of the options granted to the individuals shown above was the closing price of Tiers common stock on the day prior to the grant date. | |
(6) | Represents the full grant date fair value of each equity-based award, computed in accordance with U.S. GAAP. | |
(7) | The threshold amount represents the number of RSUs that would be issuable to Mr. Rossetti under his EVA Plan if we achieved and maintained a Share Price Performance Target of $8.00 per share, which is the lowest Share Price Performance Target under the EVA Plan, for a period of 60 days, subject to vesting requirements. RSUs that are earned vest on April 30, 2011. Vesting may be accelerated under certain circumstances described in Potential Payments upon Termination or Change of Control. RSUs are payable in shares unless no shares are available under a shareholder approved plan, in which case they are payable in cash. | |
(8) | The threshold amount represents the number of PSUs that would be issuable to the applicable executive under the PSU Plan if we achieved and maintained a Share Price Performance Target of $8.00 per share, which is the lowest Share Price Performance Target under the PSU Plan, for a period of 60 days, subject to vesting requirements. If the applicable Share Price Performance Targets are met, PSUs vest on December 4, 2011. Vesting may be accelerated under certain circumstances described in Potential Payments upon Termination or Change of Control. PSUs are payable in cash unless shares are available under a shareholder approved plan, in which case they may be payable in the form of shares at the option of Tier. | |
(9) | As discussed on page 35, each of Mr. Rossettis EVA Plan and the PSU Plan has four payout levels, each of which is associated with a Share Price Performance Target. The threshold payout level, which is associated with the lowest Share Price Performance Target, is discussed in notes (7) and (8) above. The maximum payout |
32
level, which is associated with the highest Share Price Performance Target, is discussed in notes (10) and (11) below. The middle two payout levels are the target payout levels. If Tier achieves either of the two middle Share Price Performance Targets, Mr. Rossetti will earn the number of RSUs associated with that Share Price Performance Target, and the other named executive officers will earn the number of PSUs associated with that Share Price Performance Target, in each case subject to the vesting requirements noted in footnotes (7) and (8) above. |
(10) | The maximum amount represents the number of RSUs that would be issuable to Mr. Rossetti under his EVA Plan if Tier achieved and maintained a Share Price Performance Target of $15.00 per share, which is the highest Share Price Performance Target under the EVA Plan, for a period of 60 days, subject to the vesting requirements noted in footnote (7) above. | |
(11) | The maximum amount represents the number of PSUs that would be issuable to the applicable executive under the PSU Plan if Tier achieved and maintained a Share Price Performance Target of $13.00 per share, which is the highest Share Price Performance Target under the PSU Plan, for a period of 60 days, subject to the vesting requirements noted in footnote (8) above. | |
(12) | Ms. Vellayan was awarded an option to purchase 200,000 shares of Tier stock pursuant to her employment agreement. These options, which were granted under the 2004 Plan, vest as to 20% of the underlying shares on each of the first five anniversaries of the date granted and expire in ten years. Vesting may be accelerated under certain circumstances described in Potential Payments upon Termination or Change of Control. | |
(13) | These options were granted under the 2004 Plan, vest as to 20% of the underlying shares on each of the first five anniversaries of the date granted and expire in ten years. Vesting may be accelerated under certain circumstances described in Potential Payments upon Termination or Change of Control. |
33
Option Awards | Stock Awards | |||||||||||||||||||||||
Number of |
Equity Incentive |
Equity Incentive |
||||||||||||||||||||||
Number of |
Securities |
Plan Awards: |
Plan Awards: |
|||||||||||||||||||||
Securities |
Underlying |
Number of |
Market or Payout |
|||||||||||||||||||||
Underlying |
Unexercised |
Unearned |
Value of Unearned |
|||||||||||||||||||||
Unexercised |
Options |
Option |
Shares, Units, or |
Shares, Units or |
||||||||||||||||||||
Options |
(#) |
Exercise |
Option |
Other Rights that |
Other Rights that |
|||||||||||||||||||
(#) |
Unexercisable |
Price |
Expiration |
have not Vested |
have not Vested |
|||||||||||||||||||
Name
|
Exercisable | (a) | ($) | Date | (#) | ($)(d) | ||||||||||||||||||
Ronald L. Rossetti
|
25,000 | | $ | 6.94 | 01/21/11 | |||||||||||||||||||
10,000 | | 19.56 | 01/22/12 | |||||||||||||||||||||
10,000 | | 13.75 | 01/30/13 | |||||||||||||||||||||
15,000 | | 8.62 | 01/27/14 | |||||||||||||||||||||
5,000 | | 9.77 | 10/07/14 | |||||||||||||||||||||
20,000 | | 8.30 | 06/29/15 | |||||||||||||||||||||
300,000 | | 5.50 | 07/25/16 | 150,000 | (b) | $ | 1,272,000 | |||||||||||||||||
385,000 | | 150,000 | ||||||||||||||||||||||
Nina K. Vellayan
|
| 200,000 | (1) | 4.25 | 12/03/18 | 45,000 | (c) | 381,600 | ||||||||||||||||
| 200,000 | 45,000 | ||||||||||||||||||||||
Ronald W. Johnston
|
66,666 | 133,334 | (2) | 8.01 | 06/30/18 | |||||||||||||||||||
| 75,000 | (3) | 4.25 | 12/04/18 | 37,500 | (c) | 318,000 | |||||||||||||||||
66,666 | 208,334 | 37,500 | ||||||||||||||||||||||
Keith S. Kendrick
|
20,000 | 80,000 | (4) | 7.80 | 06/29/18 | |||||||||||||||||||
| 50,000 | (5) | 4.73 | 12/29/18 | 25,000 | (c) | 212,000 | |||||||||||||||||
20,000 | 130,000 | 25,000 | ||||||||||||||||||||||
Keith Omsberg
|
2,500 | | 16.04 | 07/04/12 | ||||||||||||||||||||
3,000 | | 7.81 | 11/30/13 | |||||||||||||||||||||
2,400 | 600 | (6) | 8.60 | 10/31/14 | ||||||||||||||||||||
6,000 | 4,000 | (7) | 7.05 | 09/12/16 | ||||||||||||||||||||
6,000 | 24,000 | (8) | 10.20 | 09/30/17 | ||||||||||||||||||||
4,000 | 16,000 | (9) | 9.25 | 12/09/17 | ||||||||||||||||||||
| 15,000 | (10) | 4.25 | 12/03/18 | 12,500 | (c) | 106,000 | |||||||||||||||||
23,900 | 59,600 | 12,500 | ||||||||||||||||||||||
(a) | Vesting schedules of the unexercisable option awards are set forth below. Vesting may be accelerated under certain circumstances described in Potential Payments upon Termination or Change of Control. |
34
Footnote |
||||||||||||
Name
|
Reference | Vesting Date | Number Vesting | |||||||||
Nina K. Vellayan
|
(1 | ) | 12/04/09 | 40,000 | ||||||||
12/04/10 | 40,000 | |||||||||||
12/04/11 | 40,000 | |||||||||||
12/04/12 | 40,000 | |||||||||||
12/04/13 | 40,000 | |||||||||||
Ronald W. Johnston
|
(2 | ) | 07/01/10 | 66,667 | ||||||||
07/01/11 | 66,667 | |||||||||||
(3 | ) | 12/04/09 | 15,000 | |||||||||
12/04/10 | 15,000 | |||||||||||
12/04/11 | 15,000 | |||||||||||
12/04/12 | 15,000 | |||||||||||
12/04/13 | 15,000 | |||||||||||
Keith S. Kendrick
|
(4 | ) | 06/29/10 | 20,000 | ||||||||
06/29/11 | 20,000 | |||||||||||
06/29/12 | 20,000 | |||||||||||
06/29/13 | 20,000 | |||||||||||
(5 | ) | 12/30/09 | 10,000 | |||||||||
12/30/10 | 10,000 | |||||||||||
12/30/11 | 10,000 | |||||||||||
12/30/12 | 10,000 | |||||||||||
12/30/13 | 10,000 | |||||||||||
Keith S. Omsberg
|
(6 | ) | 11/01/09 | 600 | ||||||||
(7 | ) | 09/13/10 | 2,000 | |||||||||
09/13/11 | 2,000 | |||||||||||
(8 | ) | 10/01/09 | 6,000 | |||||||||
10/01/10 | 6,000 | |||||||||||
10/01/11 | 6,000 | |||||||||||
10/01/12 | 6,000 | |||||||||||
(9 | ) | 12/10/09 | 4,000 | |||||||||
12/10/10 | 4,000 | |||||||||||
12/10/11 | 4,000 | |||||||||||
12/10/12 | 4,000 | |||||||||||
(10 | ) | 12/04/09 | 3,000 | |||||||||
12/04/10 | 3,000 | |||||||||||
12/04/11 | 3,000 | |||||||||||
12/04/12 | 3,000 | |||||||||||
12/04/13 | 3,000 |
(b) | The table above shows the number of RSUs that would be earned by Mr. Rossetti upon achievement and maintenance of the threshold Share Price Performance Target, or $8.00 per share, for the required 60 day period. Mr. Rossetti has been granted a total of 700,000 RSUs (including the 150,000 RSUs show in the table above) under his EVA Plan. These RSUs are earned when the Share Price Performance Targets shown below are met and maintained for 60 consecutive days, and RSUs that are earned vest on April 30, 2011. Vesting may be accelerated under certain circumstances described in Potential Payments upon Termination or Change of Control. |
Share Price Performance Target
|
Number of RSUs | |||
$8.00
|
150,000 | |||
11.00
|
180,000 | |||
13.00
|
185,000 | |||
15.00
|
185,000 | |||
700,000 | ||||
(c) | The table above shows the number of PSUs that would be earned by the named executive officers upon achievement and maintenance of the threshold Share Price Performance Target, or $8.00 per share, for the |
35
required 60 day period. The named executive officers have been granted the total number of PSUs shown in the table below (which includes the PSUs shown in the table above) under the PSU Plan. These PSUs are earned when the Share Price Performance Targets shown below are met and maintained for 60 consecutive days. PSUs that have been earned vest December 4, 2011. Please see Compensation Discussion and Analysis Long-term Incentives for additional detail. Vesting may be accelerated under certain circumstances described in Potential Payments upon Termination or Change of Control. |
Number of Units at Share Price Performance Target |
Total Units that |
|||||||||||||||||||
$8.00 | $9.50 | $11.00 | $13.00 | could be Awarded | ||||||||||||||||
Nina K. Vellayan
|
45,000 | 45,000 | 45,000 | 45,000 | 180,000 | |||||||||||||||
Ronald W. Johnston
|
37,500 | 37,500 | 37,500 | 37,500 | 150,000 | |||||||||||||||
Keith S. Kendrick
|
25,000 | 25,000 | 25,000 | 25,000 | 100,000 | |||||||||||||||
Keith S. Omsberg
|
12,500 | 12,500 | 12,500 | 12,500 | 50,000 | |||||||||||||||
Total
|
480,000 | |||||||||||||||||||
(d) | Represents the market value of RSUs or PSUs, as applicable, issuable to the applicable executive upon achievement and maintenance of the $8.00 threshold Share Price Performance Target for the required 60 day period, subject to the vesting requirements noted in footnotes (b) and (c) above. The market value was determined by multiplying $8.48 (the closing price of Tiers stock at September 30, 2009) by the number of RSUs or PSUs, as applicable. |
Option Awards | ||||||||
Number of Shares |
||||||||
Acquired on Exercise |
Value Realized on |
|||||||
Name
|
(#) | Exercise ($)(1) | ||||||
Ronald L. Rossetti
|
20,000 | $ | 12,350 | |||||
Nina K. Vellayan
|
| | ||||||
Ronald W. Johnston
|
| | ||||||
Keith S. Kendrick
|
| | ||||||
Keith S. Omsberg
|
| |
(1) | Amount realized on exercise was determined by multiplying $7.43 (the closing price of Tiers common stock at July 14, 2009, the date of exercise) by the number of shares exercised and subtracting the aggregate exercise price paid for such shares. |
| a conviction of the named executive officer of, or a plea of guilty or nolo contendere by the named executive officer to, any felony; |
36
| an intentional violation by the named executive officer of federal or state securities laws; | |
| willful misconduct or gross negligence by the named executive officer that has or is reasonably likely to have a material adverse effect on Tier; | |
| a failure of the named executive officer to perform his or her reasonably assigned duties for Tier that has or is reasonably likely to have a material adverse effect on Tier; | |
| a material violation by the named executive officer of any material provision of our Business Code of Conduct or, in the case of Mr. Rossetti and Mr. Johnston, our Code of Ethics for Chief Executive, Chief Financial and Chief Accounting Officers (or successor policies on similar topics) or any other applicable policies in place; | |
| a violation by the named executive officer of any provision of his or her Proprietary and Confidential Information, Developments, Noncompetition and Nonsolicitation Agreement with us; or | |
| fraud, embezzlement, theft or dishonesty by the named executive officer against Tier. |
| any reduction in the named executive officers base salary, or in the case of Mr. Rossetti, a reduction in his maximum bonus opportunity below 100% of base salary, and in the case of each of Mr. Kendrick and Ms. Vellayan, a reduction in the minimum bonus opportunity below 50% of base salary; | |
| in the case of Mr. Rossetti, a material change in the applicable performance goals used to determine his bonus that makes it materially less likely for the goals to be achieved and which change is not reasonable in light of the Companys business, is designed to make it materially less likely for Mr. Rossetti to obtain the bonus opportunity or is applied solely to Mr. Rossetti (except to the extent relating only to the functions of a Chief Executive Officer); | |
| in the case of Mr. Rossetti, any reduction in his title, position or reporting status, unless he is provided with a comparable title, position or reporting status, or any material diminution of his duties, responsibilities, powers or authorities; | |
| in the case of Mr. Kendrick and Ms. Vellayan, any material reduction in position and reporting status (defined as reporting directly to the Chief Executive Officer of Tier or an equivalent position), or any material diminution in the nature and scope of duties, responsibilities, powers or authorities consistent with those immediately following commencement of employment by Mr. Kendrick or Ms. Vellayan, as applicable, with Tier, or the assignment of duties and responsibilities materially inconsistent with Mr. Kendricks position of Senior Vice President, Strategic Marketing or Ms. Vellayans position as Executive Vice President, Chief Operating Officer; | |
| in the case of Mr. Johnston and Mr. Omsberg, any material diminution of the named executive officers duties, responsibilities, powers, or authorities; | |
| in the case of Mr. Kendrick, any requirement imposed upon Mr. Kendrick to relocate his principal residence to any other location than Reston, Virginia or Atlanta, Georgia or a similar metropolitan area; | |
| in the case of Mr. Omsberg, any relocation of his principal place of employment by more than 50 miles or a requirement that Mr. Omsberg relocate his principal place of residence by more than 50 miles; or | |
| a material breach by Tier of any material provision of the employment agreement. |
37
Voluntary |
||||||||||||||||||||||||
Involuntary for |
Involuntary |
Termination |
||||||||||||||||||||||
Benefits and Payments |
Voluntary |
Cause |
not for Cause |
with Good |
Change of |
|||||||||||||||||||
Upon Termination
|
Termination(1) | Termination(1) | Termination(2) | Reason(2) | Death(3) | Control(4) | ||||||||||||||||||
Salary
|
$ | 12,308 | $ | 12,308 | $ | 412,308 | $ | 412,308 | $ | 412,308 | $ | 812,308 | ||||||||||||
Bonus
|
400,000 | 400,000 | 1,161,881 | 1,161,881 | 780,940 | 1,161,881 | ||||||||||||||||||
Restricted stock units(5)
|
| | | | | | ||||||||||||||||||
Health benefits
|
| | 12,000 | 12,000 | | 12,000 | ||||||||||||||||||
Tax gross-up
|
| | | | | 1,038,234 | ||||||||||||||||||
Perquisites
|
| | | | | | ||||||||||||||||||
Accrued PTO(6)
|
(10,025 | ) | (10,025 | ) | (10,025 | ) | (10,025 | ) | (10,025 | ) | (10,025 | ) | ||||||||||||
Total company obligation
|
402,283 | 402,283 | 1,576,164 | 1,576,164 | 1,183,223 | 3,014,398 | ||||||||||||||||||
Stock options(7)
|
936,150 | 936,150 | 936,150 | 936,150 | 936,150 | 936,150 | ||||||||||||||||||
Total benefit to employee
|
$ | 1,338,433 | $ | 1,338,433 | $ | 2,512,314 | $ | 2,512,314 | $ | 2,119,373 | $ | 3,950,548 | ||||||||||||
(1) | Amounts reflect maximum salary earned but not paid prior to date of termination, accrued prior year bonus not paid prior to date of termination and personal time off accrued through September 30, 2009. | |
(2) | Amounts reflect maximum salary earned and prior year bonus accrued but not paid prior to date of termination, one years base salary, bonus equal to the average annual bonus paid to Mr. Rossetti (or for the most recent year, accrued for Mr. Rossetti) for the previous three years, or the Average Historic Bonus, prorated for number of months worked prior to occurrence, bonus equal to the Average Historic Bonus, immediate vesting of all stock options, restricted stock grants and restricted stock units already issued under the EVA Plan (and an extension of the measurement period under the EVA Plan to nine months after the date of termination, with full vesting of awards that become earned because of performance during that nine month period), twelve months continuation of health benefits and personal time off accrued through September 30, 2009. In addition, in this scenario, all stock options will be exercisable for a period of one year after the date of Mr. Rossettis termination, other than a stock option for 300,000 shares granted to Mr. Rossetti on July 26, 2006, which will be exercisable until the later of five years after the date of his termination or three months following the date he is no longer serving in a capacity that would enable him to be eligible to receive option grants under the 2004 Plan, but in no event later than July 25, 2016. | |
(3) | Amounts reflect maximum salary earned and prior year bonus accrued but not paid prior to date of termination, one years base salary and bonus equal to the Average Historic Bonus, immediate vesting of all stock options, restricted stock grants and restricted stock units already issued under the EVA plan (and an extension of the measurement period under the EVA Plan to nine months after the date of termination, with full vesting of awards that become earned because of performance during that nine month period) and personal time off accrued through September 30, 2009. In addition, in this scenario, all stock options will be exercisable for a |
38
period of one year after the date of Mr. Rossettis termination due to death, other than a stock option for 300,000 shares granted to Mr. Rossetti on July 26, 2006, which will be exercisable until the date that is five years after the date of his death, but in no event later than July 25, 2016. Amounts payable in the event of a termination due to disability are the same as the foregoing, except that Mr. Rossetti would not be entitled to one years base salary and bonus equal to the Average Historic Bonus in the event of a termination for disability. | ||
(4) | The amounts payable to Mr. Rossetti upon a change of control vary depending on the relevant facts. The amounts shown in this column assume that Mr. Rossetti remains employed by Tier for the shorter of (i) 180 days after a change in control (the CIC Transition Period) and (ii) the period required by the Board in connection with the change of control, and assists in the transition during such period of employment. In this scenario, Mr. Rossetti is entitled to a payment of two times (a) his base salary in effect on the date of his termination plus (b) a bonus equal to the Average Historic Bonus, immediate vesting of all stock options, restricted stock grants and restricted stock units already issued under the EVA Plan (and an extension of the measurement period under the EVA Plan to nine months after the date of termination, with full vesting of awards that become earned because of performance during that nine month period), gross-ups on payments that are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, twelve months continuation of health benefits and personal time off accrued through September 30, 2009. In another potential scenario, if Tier terminates Mr. Rossettis employment without cause during the CIC Transition Period (or within the 60 days preceding a change of control) or he resigns because Tier does not treat him during that period as a senior executive or senior adviser, he will receive the benefits described in the previous sentence, and will also receive the benefits he would have been entitled to had he been terminated without cause by Tier in the absence of a change of control, other than one years base salary and a bonus equal to the Average Historic Bonus. In a third scenario, if Mr. Rossetti is terminated or resigns for good reason after the CIC Transition Period (or a shorter period under certain circumstances), such termination would be governed by the applicable provisions of Mr. Rossettis employment agreement, depending on the circumstances of the cessation, provided that he would not be entitled to any further cash severance in the form of one years base salary or a bonus equal to the Average Historic Bonus. Mr. Rossetti is entitled to immediate vesting of his equity awards and a nine-month extension of the EVA Plan measurement period if he is employed by Tier immediately prior to a change of control, regardless of whether or when his employment is subsequently terminated. | |
(5) | As of September 30, 2009, the stock price performance targets that trigger the award of RSUs had not been met; therefore, no units were considered awarded or vested for purposes of the table above. | |
(6) | As of September 30, 2009, Mr. Rossettis PTO days taken were in excess of his accrued amount. | |
(7) | The amount represents the value of vested options as of September 30, 2009 at a closing price of $8.48 less the cost to the employee to exercise the options at their exercise price. |
39
Voluntary |
||||||||||||||||||||||||
Involuntary for |
Involuntary not for |
Termination |
||||||||||||||||||||||
Benefits and Payments |
Voluntary |
Cause |
Cause |
with Good |
Death or |
Change of |
||||||||||||||||||
Upon Termination
|
Termination(1) | Termination(1) | Termination(2) | Reason(2) | Disability(2) | Control(3) | ||||||||||||||||||
Salary
|
$ | 8,462 | $ | 8,462 | $ | 283,462 | $ | 283,462 | $ | 283,462 | $ | 558,462 | ||||||||||||
Bonus
|
206,250 | 206,250 | 206,250 | 206,250 | 206,250 | 431,250 | ||||||||||||||||||
Performance stock units(4)
|
| | | | | | ||||||||||||||||||
Health benefits
|
| | 12,000 | 12,000 | 12,000 | 18,000 | ||||||||||||||||||
Perquisites
|
| | | | | | ||||||||||||||||||
Accrued PTO
|
12,594 | 12,594 | 12,594 | 12,594 | 12,594 | 12,594 | ||||||||||||||||||
Total company obligation
|
227,306 | 227,306 | 514,306 | 514,306 | 514,306 | 1,020,306 | ||||||||||||||||||
Stock options(5)
|
| | | | | | ||||||||||||||||||
Total benefit to employee
|
$ | 227,306 | $ | 227,306 | $ | 514,306 | $ | 514,306 | $ | 514,306 | $ | 1,020,306 | ||||||||||||
(1) | Amounts reflect maximum salary earned but not paid prior to date of termination, accrued prior year bonus not paid prior to date of termination and personal time off accrued through September 30, 2009. | |
(2) | Amounts reflect maximum salary earned but not paid prior to date of termination, accrued prior year bonus not paid prior to date of termination, one years base salary, twelve months continuation of health benefits and personal time off accrued through September 30, 2009. | |
(3) | Amounts shown are payable in the event of a termination of Ms. Vellayans employment by Tier without cause, or a resignation by Ms. Vellayan for good reason, within one year after a change of control, and reflect maximum salary earned but not paid prior to date of termination, accrued prior year bonus not paid prior to date of termination, two times (a) base salary and (b) bonus equal to the average annual bonus paid to Ms. Vellayan (or for the most recent year, accrued for Ms. Vellayan) for the previous three years (or such shorter period during which Ms. Vellayan was employed), immediate vesting of any stock options, eighteen months continuation of health benefits and personal time off accrued through September 30, 2009. | |
(4) | As of September 30, 2009, the stock price performance targets that trigger the award of performance stock units had not been met; therefore, no units were considered awarded or vested for purposes of the table above. In the event Ms. Vellayans employment terminates within 24 months of a change of control due to her death, disability, termination by Tier without cause, or resignation by Ms. Vellayan for good reason, all PSUs previously awarded (if any) will vest in full. | |
(5) | The amount represents the value of vested options as of September 30, 2009 at a closing price of $8.48 less the cost to the employee to exercise the options at their exercise price. |
40
Voluntary |
||||||||||||||||||||||||
Involuntary for |
Involuntary not |
Termination |
||||||||||||||||||||||
Benefits and Payments |
Voluntary |
Cause |
for Cause |
with Good |
Death or |
Change of |
||||||||||||||||||
Upon Termination
|
Termination(1) | Termination(1) | termination(2) | Reason(2) | Disability(2) | Control(3) | ||||||||||||||||||
Salary
|
$ | 8,369 | $ | 8,369 | $ | 280,369 | $ | 280,369 | $ | 280,369 | $ | 552,369 | ||||||||||||
Bonus
|
165,000 | 165,000 | 165,000 | 165,000 | 165,000 | 371,250 | ||||||||||||||||||
Performance stock units(4)
|
| | | | | | ||||||||||||||||||
Health benefits
|
| | 12,000 | 12,000 | 12,000 | 18,000 | ||||||||||||||||||
Perquisites
|
| | | | | | ||||||||||||||||||
Accrued PTO
|
26,049 | 26,049 | 26,049 | 26,049 | 26,049 | 26,049 | ||||||||||||||||||
Total company obligation
|
199,418 | 199,418 | 483,418 | 483,418 | 483,418 | 967,668 | ||||||||||||||||||
Stock options(5)
|
31,333 | 31,333 | 31,333 | 31,333 | 31,333 | 31,333 | ||||||||||||||||||
Total benefit to employee
|
$ | 230,751 | $ | 230,751 | $ | 514,751 | $ | 514,751 | $ | 514,751 | $ | 999,001 | ||||||||||||
(1) | Amounts reflect maximum salary earned but not paid prior to date of termination, accrued prior year bonus not paid prior to date of termination and personal time off accrued through September 30, 2009. | |
(2) | Amounts reflect maximum salary earned but not paid prior to date of termination, accrued prior year bonus not paid prior to date of termination, one years base salary, twelve months continuation of health benefits and personal time off accrued through September 30, 2009. | |
(3) | Amounts shown are payable in the event of a termination of Mr. Johnstons employment by Tier without cause, or a resignation by Mr. Johnston for good reason, within one year after a change of control, and reflect maximum salary earned but not paid prior to date of termination, accrued prior year bonus not paid prior to date of termination, two times (a) base salary and (b) bonus equal to the average annual bonus paid to Mr. Johnston (or for the most recent year, accrued for Mr. Johnston) for the previous three years (or such shorter period during which Mr. Johnston was employed), immediate vesting of any stock options, eighteen months continuation of health benefits and personal time off accrued through September 30, 2009. | |
(4) | As of September 30, 2009, the stock price performance targets that trigger the award of performance stock units had not been met, therefore no units were considered awarded or vested for purposes of the table above. In the event Mr. Johnstons employment terminates within 24 months of a change of control due to his death, disability, termination by Tier without cause, or resignation by Mr. Johnston for good reason, all PSUs previously awarded (if any) will vest in full. | |
(5) | The amount represents the value of vested options as of September 30, 2009 at a closing price of $8.48 less the cost to the employee to exercise the options at their exercise price. |
41
Voluntary |
||||||||||||||||||||||||
Involuntary for |
Involuntary not |
Termination |
||||||||||||||||||||||
Benefits and Payments |
Voluntary |
Cause |
for Cause |
with Good |
Death or |
Change of |
||||||||||||||||||
Upon Termination
|
Termination(1) | Termination(1) | Termination(2) | Reason(2) | Disability(2) | Control(3) | ||||||||||||||||||
Salary
|
$ | 8,154 | $ | 8,154 | $ | 273,154 | $ | 273,154 | $ | 273,154 | $ | 538,154 | ||||||||||||
Bonus
|
21,500 | 21,500 | 21,500 | 21,500 | 21,500 | 419,000 | ||||||||||||||||||
Performance stock units(4)
|
| | | | | | ||||||||||||||||||
Health benefits
|
| | 12,000 | 12,000 | 12,000 | 18,000 | ||||||||||||||||||
Perquisites
|
| | | | | | ||||||||||||||||||
Accrued PTO
|
14,593 | 14,593 | 14,593 | 14,593 | 14,593 | 14,593 | ||||||||||||||||||
Total company obligation
|
44,247 | 44,247 | 321,247 | 321,247 | 321,247 | 989,747 | ||||||||||||||||||
Stock options(5)
|
13,600 | 13,600 | 13,600 | 13,600 | 13,600 | 13,600 | ||||||||||||||||||
Total benefit to employee
|
$ | 57,847 | $ | 57,847 | $ | 334,847 | $ | 334,847 | $ | 334,847 | $ | 1,003,347 | ||||||||||||
(1) | Amounts reflect maximum salary earned but not paid prior to date of termination, accrued prior year bonus not paid prior to date of termination and personal time off accrued through September 30, 2009. | |
(2) | Amounts reflect maximum salary earned but not paid prior to date of termination, accrued prior year bonus not paid prior to date of termination, one years base salary, twelve months continuation of health benefits and personal time off accrued through September 30, 2009. | |
(3) | Amounts shown are payable in the event of a termination of Mr. Kendricks employment by Tier without cause, or a resignation by Mr. Kendrick for good reason, within one year after a change of control, and reflect maximum salary earned but not paid prior to date of termination, accrued prior year bonus not paid prior to date of termination, two times (a) base salary and (b) bonus equal to the average annual bonus paid to Mr. Kendrick (or for the most recent year, accrued for Mr. Kendrick) for the previous three years (or such shorter period during which Mr. Kendrick was employed), immediate vesting of options, eighteen months continuation of health benefits and personal time off accrued through September 30, 2009. | |
(4) | As of September 30, 2009, the stock price performance targets that trigger the award of performance stock units had not been met, therefore no units were considered awarded or vested for purposes of the table above. In the event Mr. Kendricks employment terminates within 24 months of a change of control due to his death, disability, termination by Tier without cause, or resignation by Mr. Kendrick for good reason, all PSUs previously awarded (if any) will vest in full. | |
(5) | The amount represents the value of vested options as of September 30, 2009 at a closing price of $8.48 less the cost to the employee to exercise the options at their exercise price. |
42
Voluntary |
||||||||||||||||||||||||
Involuntary for |
Involuntary not |
Termination |
||||||||||||||||||||||
Benefits and Payments |
Voluntary |
Cause |
for Cause |
with Good |
Death or |
Change of |
||||||||||||||||||
Upon Termination
|
Termination(1) | Termination(1) | Termination(2) | Reason(2) | Disability(2) | Control(3) | ||||||||||||||||||
Salary
|
$ | 5,846 | $ | 5,846 | $ | 195,846 | $ | 195,846 | $ | 195,846 | $ | 385,846 | ||||||||||||
Bonus
|
| | | | | 96,833 | ||||||||||||||||||
Performance stock units(4)
|
| | | | | | ||||||||||||||||||
Health benefits
|
| | 12,000 | 12,000 | 12,000 | 18,000 | ||||||||||||||||||
Perquisites
|
| | | | | | ||||||||||||||||||
Accrued PTO
|
19,026 | 19,026 | 19,026 | 19,026 | 19,026 | 19,026 | ||||||||||||||||||
Total company obligation
|
24,872 | 24,872 | 226,872 | 226,872 | 226,872 | 519,705 | ||||||||||||||||||
Stock options(5)
|
10,590 | 10,590 | 10,590 | 10,590 | 10,590 | 10,590 | ||||||||||||||||||
Total employee benefit
|
$ | 35,462 | $ | 35,462 | $ | 237,462 | $ | 237,462 | $ | 237,462 | $ | 530,295 | ||||||||||||
(1) | Amounts reflect maximum salary earned but not paid prior to date of termination, accrued prior year bonus not paid prior to date of termination and personal time off accrued through September 30, 2009. | |
(2) | Amounts reflect maximum salary earned but not paid prior to date of termination, accrued prior year bonus not paid prior to date of termination, one years base salary, twelve months continuation of health benefits and personal time off accrued through September 30, 2009. | |
(3) | Amounts shown are payable in the event of a termination of Mr. Omsbergs employment by Tier without cause, or a resignation by Mr. Omsberg for good reason, within one year after a change of control, and reflect maximum salary earned but not paid prior to date of termination, accrued prior year bonus not paid prior to date of termination, two times (a) base salary and (b) bonus equal to the average bonus paid over the preceding three years (which average would include the retention payment in the amount of $85,000 pursuant to the February 5, 2007 retention agreement between Mr. Omsberg and Tier), immediate vesting of options that would have vested within eighteen months of the termination of Mr. Omsbergs employment, full vesting of all performance stock units awarded in accordance with the PSU Plan (if any), eighteen months continuation of health benefits and personal time off accrued through September 30, 2009. | |
(4) | As of September 30, 2009, the stock price performance targets that trigger the award of performance stock units had not been met, therefore no units were considered awarded or vested for purposes of the table above. In the event Mr. Omsbergs employment terminates within 24 months of a change of control due to his death, disability, termination by Tier without cause, or resignation by Mr. Omsberg for good reason, all PSUs previously awarded (if any) will vest in full. | |
(5) | The amount represents the value of vested options as of September 30, 2009 at a closing price of $8.48 less the cost to the employee to exercise the options at their exercise price. |
43
Fiscal |
||||
Pay Component
|
2009 | |||
Board retainer (payable quarterly in arrears)
|
$ | 20,000 | ||
Board member fee (per meeting)
|
||||
In-person meeting
|
1,000 | |||
Telephonic meeting
|
500 | |||
Committee chair retainer (payable quarterly in arrears)
|
||||
Audit committee
|
5,000 | |||
All other committees
|
2,500 | |||
Committee meeting fee (per meeting)
|
||||
In-person meeting
|
1,000 | |||
Telephonic meeting
|
500 | |||
Lead director retainer (payable quarterly in arrears)
|
5,000 |
| Death and disability Pro rata vesting through the date of death or disability; immediate payout | |
| Voluntary resignation Pro rata vesting through the date of resignation; payable at end of 3-year vesting period | |
| Termination for cause Forfeit entire award | |
| Change of control 100% vesting, payable on date of change of control |
44
Fees Earned or Paid |
||||||||||||
Name
|
in Cash ($) | Stock Awards ($)(1) | Total ($) | |||||||||
Charles W. Berger (Chair Audit Committee)
|
$ | 41,000 | $ | 12,720 | $ | 53,720 | ||||||
Samuel Cabot III(2)
|
25,750 | | 25,750 | |||||||||
John J. Delucca (Vice Chair Audit Committee)
|
37,500 | 12,720 | 50,220 | |||||||||
Daniel J. Donoghue(3)
|
17,000 | 12,720 | 29,720 | |||||||||
Morgan P. Guenther (Chair Governance and Nominating
Committee)
|
52,500 | 12,720 | 65,220 | |||||||||
Philip G. Heasley (Chair Compensation Committee and Lead
Director)
|
46,500 | 12,720 | 59,220 | |||||||||
Michael R. Murphy(3)
|
19,500 | 12,720 | 32,220 | |||||||||
David A. Poe (Chair Data Security Committee)
|
31,875 | 12,720 | 44,595 | |||||||||
Zachary F. Sadek(3)
|
16,500 | 12,720 | 29,220 | |||||||||
James R. Stone(4)
|
18,500 | | 18,500 |
(1) | The amounts included in this column reflect the dollar amount recognized as an expense for financial statement reporting purposes in fiscal 2009 for restricted stock unit awards, calculated in accordance with US GAAP. Assumptions used in the calculation of these amounts are included in footnote 14 to the audited consolidated financial statements included in our annual report on Form 10-K for the fiscal year ended September 30, 2009, as amended. The expense per member has been calculated as total expense to be recognized on the date of valuation per month multiplied by the number of months in measurement period, based on the following: |
Number of RSUs awarded
|
9,000 | |||
Fair value of award (closing price on day of valuation)
|
$ | 8.48 | ||
Total fair value
|
$ | 76,320 | ||
Total months to recognize expense
|
36 | |||
Number of months in measurement period
|
6 |
Name
|
Stock Awards Outstanding | Options Outstanding | ||||||
Charles W. Berger
|
9,000 | 140,000 | ||||||
John J. Delucca
|
9,000 | 40,000 | ||||||
Daniel J. Donoghue
|
9,000 | | ||||||
Morgan P. Guenther
|
9,000 | 150,000 | ||||||
Philip G. Heasley
|
9,000 | 10,002 | ||||||
Michael R. Murphy
|
9,000 | | ||||||
David A. Poe
|
9,000 | 6,668 | ||||||
Zachary F. Sadek
|
9,000 | |
(2) | Mr. Cabots term of office expired when his successor was elected at our 2009 annual meeting. | |
(3) | Messrs. Donoghue, Murphy and Sadek joined our Board in March 2009. | |
(4) | Mr. Stone did not stand for re-election at our 2009 annual meeting. |
45
2009 | 2008 | |||||||
Audit Fees(1)
|
$ | 539 | $ | 540 | ||||
Audit Related Fees(2)
|
52 | | ||||||
Tax Fees
|
| | ||||||
All Other Fees
|
| | ||||||
Total
|
$ | 591 | $ | 540 | ||||
(1) | Represents fees for the audit of our financial statements, review of our quarterly financial statements, audit of our internal controls, and advice on accounting matters directly related to the audit and audit services provided in connection with other statutory and regulatory filings. | |
(2) | Represents fees associated with the review of ChoicePay financial statements, as a result of the acquisition of ChoicePay in January 2009. |
46
47
48
RESOLVED:
|
That, subject to the approval of the stockholders of the Corporation, Article FIRST of the Restated Certificate of Incorporation of the Corporation be and hereby is amended and restated in its entirety so that the same shall read in full as follows: | |
FIRST: The name of the Corporation is: Official Payments Holdings, Inc. |
By: |
Name: Title: |
A-1
| Take Reston Parkway west to Sunrise Valley Drive. | |
| Continue for one-quarter mile; the hotel will be on your left. |
| Take Interstate 66 West and follow the exit signs for Washington/Dulles Airport 267 Toll Road. | |
| Proceed on 267 West to Reston Parkway, Exit 12. | |
| Turn left on Reston Parkway. At the second light turn left again onto Sunrise Valley Drive. | |
| Continue for a quarter mile; the hotel will be on your left. |
| Take Washington Parkway to Capital Beltway Interstate 495 into Virginia. | |
| Merge onto the Dulles access Toll Road 267 East. | |
| Take Exit 12 to Reston Parkway and turn left. | |
| Proceed to the first light and turn left on Sunrise Valley Drive. | |
| Continue for a quarter mile; the hotel will be on the left. |
| Follow Capitol Beltway Interstate 495 North. | |
| Take the exit for Washington/Dulles Airport 267 Toll Road West. | |
| Proceed on 267 West to Reston Parkway, Exit 12. | |
| Turn left on Reston Parkway to the second light, then turn left again on Sunrise Valley Drive. | |
| Continue for a quarter mile; the hotel will be on your left. |
| Follow Capitol Beltway Interstate 495 to Virginia. | |
| Take the exit for Washington/Dulles Airport 267 Toll Road West. | |
| Follow 267 West to Reston Parkway, Exit 12. | |
| Turn left on Reston Parkway. At the second light turn left again onto Sunrise Valley Drive. | |
| Continue for a quarter mile; the hotel will be on your left. |
| Follow Dulles access Toll Road 267 East. | |
| Take Exit 12 to Reston Parkway and turn right. | |
| Go to the first light and turn left on Sunrise Valley Drive. | |
| Continue for a quarter mile; the hotel will be on the left. |
B-1
VOTE BY INTERNET www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on April 7, 2010. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on April 7, 2010. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, Tier Technologies, Inc, c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: M20789-P88628 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY To withhold authority to vote for any TIER TECHNOLOGIES, INC. For Withhold For All individual nominee(s), mark For All Except and write All All Except the number(s) of the nominee(s) on the line THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR below. PROPOSALS 1, 2 AND 3. 1. PROPOSAL NO. 1: Nominees for Directors for election by the holders of common stock: 01) Charles W. Berger 05) David A. Poe 02) John J. Delucca 06) Ronald L. Rossetti 03) Morgan P. Guenther 07) Zachary F. Sadek 04) Philip G. Heasley For Against Abstain 2. PROPOSAL NO. 2: To ratify the selection of McGladrey & Pullen, LLP as the Companys independent registered public accounting firm for the fiscal year ending September 30, 2010. 3. PROPOSAL NO. 3: To amend the Companys Restated Certificate of Incorporation to change the Companys name to Official Payments Holdings, Inc. Unless otherwise specified on the reverse side, this proxy authorizes the proxies named on the reverse side to cumulate votes that the undersigned is entitled to cast at the annual meeting in connection with the election of directors; provided that the proxies will not cumulate votes for any nominees from whom the undersigned has withheld authority to vote. To specify different directions with regard to cumulative voting, including to direct that the proxy holders cumulate votes with respect to a specific Board nominee or nominees as explained in the proxy statement, mark the box below and write your instructions on the reverse side. (If you wish to direct that the proxy holders cumulate votes with respect to a specific Board nominee or nominees, please indicate the name(s) and the number of votes to be given to such Board nominee(s)). If the undersigned hold(s) any of the shares of common stock in a fiduciary, custodial, or joint capacity or capacities, this proxy is signed by the undersigned in every such capacity as well as individually. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date |
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE M20790-P88628 TIER TECHNOLOGIES, INC. PROXY ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 8, 2010 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned stockholder of Tier Technologies, Inc., hereby constitutes and appoints Ronald W. Johnston and Keith S. Omsberg and each of them, with full power of substitution, as proxy or proxies of the undersigned to vote the number of shares of common stock which the undersigned would be entitled to vote if personally present at Tiers Annual Meeting of Stockholders, to be held at the Sheraton Reston Hotel located at 11810 Sunrise Valley Drive, Reston, Virginia at 10:00 a.m. local P time on April 8, 2010, and at any adjournments or postponements thereof, with respect to the proposals described in the Notice of Annual Meeting of Stockholders and proxy statement, in the manner specified on the reverse side. The proxies are further authorized R to vote, in their discretion, upon such other business as may properly come before the meeting or any postponements or adjournments thereof. O THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AMONG THE BOARDS NOMINEES AS DIRECTED BY THE X STOCKHOLDER. WHERE NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED, SUCH SHARES WILL BE VOTED CUMULATIVELY IN THE DISCRETION OF THE PROXY HOLDERS AMONG THE BOARDS NOMINEES Y NAMED IN PROPOSAL NO. 1 (EXCEPT FOR ANY NOMINEES FOR WHOM THE UNDERSIGNED HAS WITHHELD AUTHORITY TO VOTE), FOR PROPOSAL NO. 2, AND FOR PROPOSAL NO. 3. Cumulative Voting Instructions (Mark the Corresponding box on the reverse side) (If you noted cumulative voting instructions above, please check the corresponding box on the reverse side.) |