def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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Filed by a Party other than the Registrant
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Check the appropriate box: |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to § 240.14a-12 |
Compellent Technologies, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
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COMPELLENT
TECHNOLOGIES, INC.
7625 Smetana Lane
Eden Prairie, Minnesota 55344
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held On May 20,
2008
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Compellent Technologies, Inc., a Delaware
corporation. The meeting will be held on Tuesday, May 20,
2008 at 3:30 p.m. local time at Faegre & Benson,
LLP, 2200 Wells Fargo Center, 90 South 7th Street,
Minneapolis, MN 55402 for the following purposes:
1. To elect two directors nominated by the Board of
Directors to hold office until the 2011 Annual Meeting of
Stockholders.
2. To ratify the selection by the Audit Committee of the
Board of Directors of Grant Thornton LLP as our independent
registered public accounting firm for the year ending
December 31, 2008.
3. To conduct any other business properly brought before
the meeting.
These items of business are more fully described in the Proxy
Statement accompanying this Notice.
The record date for the Annual Meeting is April 7, 2008.
Only stockholders of record at the close of business on that
date may vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
Lawrence E. Aszmann
Secretary
Eden Prairie, Minnesota
April 22, 2008
You are cordially invited to attend the Annual Meeting in
person. Whether or not you expect to attend the Annual Meeting,
please complete, date, sign and return the enclosed proxy, or
vote over the telephone or the Internet as instructed in these
materials, as promptly as possible in order to ensure your
representation at the Annual Meeting. A return envelope (which
is postage prepaid if mailed in the United States) is enclosed
for your convenience. Even if you have voted by proxy, you may
still vote in person if you attend the Annual Meeting. Please
note, however, that if your shares are held of record by a
broker, bank or other nominee and you wish to vote at the Annual
Meeting, you must obtain a proxy issued in your name from that
record holder.
COMPELLENT
TECHNOLOGIES, INC.
7625 Smetana Lane
Eden Prairie, Minnesota 55344
PROXY STATEMENT
FOR THE 2008 ANNUAL MEETING OF
STOCKHOLDERS
MAY 20, 2008
QUESTIONS
AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
Why am I
receiving these materials?
We have sent you this proxy statement and the enclosed proxy
card because the Board of Directors of Compellent Technologies,
Inc. is soliciting your proxy to vote at the 2008 Annual Meeting
of Stockholders, or the Annual Meeting, including at any
adjournments or postponements of the Annual Meeting. You are
invited to attend the Annual Meeting to vote on the proposals
described in this proxy statement. However, you do not need to
attend the Annual Meeting to vote your shares. Instead, you may
simply complete, sign and return the enclosed proxy card, or
follow the instructions below to submit your proxy over the
telephone or on the Internet.
We intend to mail this proxy statement and accompanying proxy
card on or about April 22, 2008 to all stockholders of
record entitled to vote at the Annual Meeting.
Who can
vote at the Annual Meeting?
Only stockholders of record at the close of business on
April 7, 2008 will be entitled to vote at the Annual
Meeting. On this record date, there were 30,604,450 shares
of common stock outstanding and entitled to vote.
Stockholder
of Record: Shares Registered in Your Name
If, on April 7, 2008, your shares were registered directly
in your name with Compellents transfer agent, Wells Fargo
Shareholder Services, then you are a stockholder of record. As a
stockholder of record, you may vote in person at the Annual
Meeting or vote by proxy. Whether or not you plan to attend the
Annual Meeting, we urge you to fill out and return the enclosed
proxy card or vote by proxy over the telephone or on the
Internet as instructed below to ensure your vote is counted.
Beneficial
Owner: Shares Registered in the Name of a Broker or
Bank
If, on April 7, 2008, your shares were held, not in your
name, but rather in an account at a brokerage firm, bank,
dealer, or other similar organization, then you are the
beneficial owner of shares held in street name and
these proxy materials are being forwarded to you by that
organization. The organization holding your account is
considered to be the stockholder of record for purposes of
voting at the Annual Meeting. As a beneficial owner, you have
the right to direct your broker or other agent how to vote the
shares in your account. You are also invited to attend the
Annual Meeting. However, since you are not the stockholder of
record, you may not vote your shares in person at the Annual
Meeting unless you request and obtain a valid proxy from your
broker or other agent.
What am I
voting on?
There are two matters scheduled for a vote:
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Proposal 1, election of two directors until the 2011 Annual
Meeting of Stockholders; and
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Proposal 2, ratification of Grant Thornton LLP as our
independent registered public accounting firm for the year
ending December 31, 2008.
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How do I
vote?
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For Proposal 1, you may either vote For all the
nominees to the Board of Directors or you may
Withhold your vote for any nominee you specify.
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For Proposal 2, you may vote For or
Against or abstain from voting.
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The procedures for voting are fairly simple:
Stockholder
of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in person at
the Annual Meeting, vote by proxy using the enclosed proxy card,
vote by proxy over the telephone, or vote by proxy on the
Internet. Whether or not you plan to attend the Annual Meeting,
we urge you to vote by proxy to ensure your vote is counted. You
may still attend the Annual Meeting and vote in person even if
you have already voted by proxy.
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To vote in person, come to the Annual Meeting and we will give
you a ballot when you arrive.
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To vote using the proxy card, simply complete, sign and date the
enclosed proxy card and return it promptly in the envelope
provided. If you return your signed proxy card to us before the
Annual Meeting, we will vote your shares as you direct.
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To vote over the telephone, dial toll-free
(800) 690-6903
using a touch-tone phone and follow the recorded instructions.
You will be asked to provide the company number and control
number from the enclosed proxy card. Your vote must be received
by 11:59 p.m., Eastern Time on May 19, 2008 to be
counted.
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To vote on the Internet, go to
http://www.proxyvote.com
to complete an electronic proxy card. You will be asked to
provide the company number and control number from the enclosed
proxy card. Your vote must be received by 11:59 p.m.,
Eastern Time on May 19, 2008 to be counted.
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Beneficial
Owner: Shares Registered in the Name of Broker or
Bank
If you are a beneficial owner of shares registered in the name
of your broker, bank, or other agent, you should have received a
proxy card and voting instructions with these proxy materials
from that organization rather than from Compellent. Simply
complete and mail the proxy card to ensure that your vote is
counted. Alternatively, you may vote by telephone or over the
Internet as instructed by your broker or bank. To vote in person
at the Annual Meeting, you must obtain a valid proxy from your
broker, bank, or other agent. Follow the instructions from your
broker or bank included with these proxy materials, or contact
your broker or bank to request a proxy form.
We provide Internet proxy voting to allow you to vote your
shares on-line, with procedures designed to ensure the
authenticity and correctness of your proxy vote instructions.
However, please be aware that you must bear any costs associated
with your Internet access, such as usage charges from Internet
access providers and telephone companies.
How many
votes do I have?
On each matter to be voted upon, you have one vote for each
share of common stock you own as of April 7, 2008.
What if I
return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any
voting selections, your shares will be voted For the
election of all two nominees for director and For
the ratification of Grant Thornton LLP as our independent
registered public accounting firm for the year ending
December 31, 2008. If any other matter is properly
presented at the Annual Meeting, your proxyholder (one of the
individuals named on your proxy card) will vote your shares
using his best judgment.
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Who is
paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In
addition to these mailed proxy materials, our directors and
employees may also solicit proxies in person, by telephone, or
by other means of communication. Directors and employees will
not be paid any additional compensation for soliciting proxies.
We may also reimburse brokerage firms, banks and other agents
for the cost of forwarding proxy materials to beneficial owners.
What does
it mean if I receive more than one proxy card?
If you receive more than one proxy card, your shares are
registered in more than one name or are registered in different
accounts. Please complete, sign and return each proxy card to
ensure that all of your shares are voted.
Can I
change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before the final vote
at the Annual Meeting. If you are the record holder of your
shares, you may revoke your proxy in any one of three ways:
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You may submit another properly completed proxy card with a
later date.
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You may send a timely written notice that you are revoking your
proxy to Compellents Secretary at Compellent Technologies,
Inc., 7625 Smetana Lane, Eden Prairie, Minnesota 55344.
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You may attend the Annual Meeting and vote in person. Simply
attending the Annual Meeting will not, by itself, revoke your
proxy.
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If your shares are held by your broker or bank as a nominee or
agent, you should follow the instructions provided by your
broker or bank.
When are
stockholder proposals due for next years annual
meeting?
To be considered for inclusion in next years proxy
materials, your proposal must be submitted in writing by
December 23, 2008, to Compellents Secretary at
Compellent Technologies, Inc., 7625 Smetana Lane, Eden Prairie,
Minnesota 55344. However, if Compellents 2009 Annual
Meeting of Stockholders is not held between April 20, 2009
and June 19, 2009, then the deadline will be a reasonable
time prior to the time Compellent begins to print and mail its
proxy materials.
If you wish to bring a proposal before the stockholders or
nominate a director at the 2009 Annual Meeting of Stockholders,
but you are not requesting that your proposal or nomination be
included in next years proxy materials, you must notify
Compellents Secretary, in writing, not later than the
close of business on February 19, 2009. However, if
Compellents 2009 Annual Meeting of Stockholders is not
held between April 20, 2009 and June 19, 2009, then
the deadline will be not later than the close of business on the
10th day following the date on which the notice of the date
of the 2009 Annual Meeting of Stockholders was mailed, or the
10th day following the date on which public disclosure of
the date of the 2009 Annual Meeting of Stockholders was made,
whichever occurs first. We also advise you to review our bylaws,
which contain additional requirements about advance notice of
stockholder proposals and director nominations. The chairman of
the 2009 Annual Meeting of Stockholders may determine, if the
facts warrant, that a matter has not been properly brought
before the meeting and, therefore, may not be considered at the
meeting.
How are
votes counted?
Votes will be counted by the inspector of election appointed for
the Annual Meeting, who will separately count For
and Withhold votes. With respect to proposals other
than the election of directors, the inspector of elections will
also count Against votes, abstentions and broker
non-votes. Abstentions will be counted towards the vote total
for each proposal other than the election of directors, and will
have the same effect as Against votes. Broker
non-votes have no effect and will not be counted towards the
vote total for any proposal.
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What are
broker non-votes?
Broker non-votes occur when a beneficial owner of shares held in
street name does not give instructions to the broker
or nominee holding the shares as to how to vote on matters
deemed non-routine. Generally, if shares are held in
street name, the beneficial owner of the shares is entitled to
give voting instructions to the broker or nominee holding the
shares. If the beneficial owner does not provide voting
instructions, the broker or nominee can still vote the shares
with respect to matters that are considered to be
routine, but not with respect to
non-routine matters. Under the rules and
interpretations of The New York Stock Exchange,
non-routine matters are generally those involving a
contest or a matter that may substantially affect the rights or
privileges of stockholders, such as mergers or stockholder
proposals.
How many
votes are needed to approve each proposal?
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For Proposal 1 (the election of two directors), the two
nominees receiving the most For votes (from the
holders of shares present in person or represented by proxy and
entitled to vote on the election of directors) will be elected.
Only votes For or Withheld will affect
the outcome.
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For Proposal No. 2 (the ratification of Grant Thornton
LLP as our independent registered public accounting firm for the
year ending December 31, 2008), Grant Thornton LLP must
receive For votes from the holders of a majority of
shares present and entitled to vote either in person or by
proxy. If you Abstain from voting, it will have the
same effect as an Against vote. Broker non-votes
will have no effect.
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What is
the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A
quorum will be present if stockholders holding at least a
majority of the outstanding shares are present at the Annual
Meeting in person or represented by proxy. On the record date,
there were 30,604,450 shares outstanding and entitled to
vote. Thus, the holders of 15,302,226 shares must be
present in person or represented by proxy at the Annual Meeting
or by proxy to have a quorum.
Your shares will be counted towards the quorum only if you
submit a valid proxy (or one is submitted on your behalf by your
broker, bank or other nominee) or if you vote in person at the
Annual Meeting. Abstentions and broker non-votes will be counted
towards the quorum requirement. If there is no quorum, the
holders of a majority of shares present at the meeting in person
or represented by proxy may adjourn the Annual Meeting to
another date.
How can I
find out the results of the voting at the Annual
Meeting?
Preliminary voting results will be announced at the Annual
Meeting. Final voting results will be published in
Compellents quarterly report on
Form 10-Q
for the second quarter of 2008.
PROPOSAL 1
ELECTION
OF DIRECTORS
Our Board of Directors, or our Board, is divided into three
classes. Each class consists, as nearly as possible, of
one-third of the total number of directors, and each class has a
three-year term. Vacancies on the Board may be filled only by
persons appointed by a majority of the remaining directors. A
director appointed by the Board to fill a vacancy in a class,
including a vacancies created by an increase in the number of
directors, shall serve for the remainder of the full term of
that class and until the directors successor is elected
and qualified or such directors earlier death, resignation
or removal.
Our Board presently has six members. There are two directors in
the class whose term of office expires in 2008, Mr. Soran
and Mr. Wehrwein, each of whom is currently a director of
Compellent. The Nominating and Corporate Governance Committee of
the Board recommended to the Board that each of Mr. Soran
and Mr. Wehrwein be nominated for election at the Annual
Meeting. Mr. Soran was previously elected by the
stockholders. Mr. Wehrwein, who was appointed to the Board
in April 2007 to fill a vacancy on the Board, was originally
recommended to serve on our Board by the chief executive officer
of a non-affiliated publicly traded company. If elected at the
Annual
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Meeting, each of these nominees would serve until the 2011
Annual Meeting and until his successor is elected and has
qualified, or, if sooner, until the directors death,
resignation or removal. We encourage our directors and nominees
for director to attend the Annual Meeting.
Directors are elected by a plurality of the votes of the holders
of shares present in person or represented by proxy and entitled
to vote on the election of directors. The two nominees receiving
the highest number of affirmative votes will be elected. Shares
represented by executed proxies will be voted, if authority to
do so is not withheld, for the election of the two nominees
named below. If any nominee becomes unavailable for election as
a result of an unexpected occurrence, your shares will be voted
for the election of a substitute nominee proposed by our
management team. Each person nominated for election has agreed
to serve if elected. Our management has no reason to believe
that any nominee will be unable to serve.
THE
BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE TO THE
BOARD.
Members
of the Board of Directors
The following is information regarding each of the members of
our Board as of the date of this proxy statement.
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Position
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with
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Director
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Expiration
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Name
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Compellent
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Age
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Since
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of Term
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Philip E. Soran
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Chairman, President and Chief Executive Officer
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51
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March 2002
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2008
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Sven A. Wehrwein
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Director
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57
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April 2007
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2008
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Neel Sarkar
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Director
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37
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April 2005
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2009
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R. David Spreng
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Director
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46
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December 2006
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2009
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Charles Beeler
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Director
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July 2002
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2010
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John P. Guider
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Chief Operating Officer and Director
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March 2002
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2010
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Nominees
for Election for a Three-year Term Expiring at Our 2011 Annual
Meeting
Philip
E. Soran
Philip E. Soran has served as our President and Chief Executive
Officer since co-founding Compellent in March 2002. From July
1995 to August 2001, Mr. Soran served as President and
Chief Executive Officer of Xiotech Corporation, or Xiotech, a
storage area networking company, which Mr. Soran co-founded
in July 1995. Xiotech was acquired by Seagate Technology, or
Seagate, a disk drive manufacturer, in January 2000. From
October 1992 to April 1995, Mr. Soran served as Executive
Vice President of Prodea Software Corporation, a data
warehousing software company. From 1982 to 1992, Mr. Soran
also held a variety of management, sales, marketing and
technical positions with IBM. Mr. Soran received a B.A. in
Education from the University of Northern Colorado.
Sven
A. Wehrwein
Sven A. Wehrwein has over 30 years of experience in
accounting, finance and investment banking. Since 1999,
Mr. Wehrwein has provided financial consulting services to
emerging growth companies. Mr. Wehrwein previously served
as Chief Financial Officer of Digi International Inc., a
networking solutions company, and Instent, Inc., a medical
device company. Mr. Wehrwein also serves on the board of
directors of Image Sensing Systems, Inc., a video imaging
company, Synovis Life Technologies, Inc., a medical device
company, Uroplasty, Inc., a medical device company, and Vital
Images, Inc., a visualization software company.
Mr. Wehrwein received an M.S. in Management from the Sloan
School at the Massachusetts Institute of Technology and is a
certified public accountant.
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Directors
Continuing in Office Until Our 2009 Annual Meeting
Neel
Sarkar
Neel Sarkar has been with Centennial Ventures, a venture capital
firm, since 2002 and has been a Managing Director since December
2005. Mr. Sarkar previously served as a Principal of
Centennial Ventures from December 2003 to December 2005 and as
an Associate from January 2002 to December 2003. From 2000 to
2002, Mr. Sarkar was with Dell, Inc., a computer company,
where he most recently served as Director of Strategy and
Business Development for the server and storage division. From
1998 to 2000, Mr. Sarkar was a consultant with
McKinsey & Company, a management consulting company.
From 1993 to 1998, he served in various operations, management,
supply chain and information technology strategy positions with
divisions of General Electric Co., a diversified industrial
corporation, and Exelon Corporation, a power general services
company. Mr. Sarkar received a B.S. in Electrical
Engineering from M.I.T. and an M.B.A. from the J.L. Kellogg
Graduate School of Management at Northwestern University.
R. David Spreng has been a Managing General Partner of
Crescendo Ventures, a venture capital firm he founded since
1998. Mr. Spreng is active with the World Economic Forum
and is a member of the board of directors of the National
Venture Capital Association. Mr. Spreng received a B.S. in
Accounting from the University of Minnesota.
Directors
Continuing in Office Until Our 2010 Annual Meeting
Charles
Beeler
Charles Beeler has been a General Partner of El Dorado Ventures,
a venture capital firm since 1999. Prior to 1999,
Mr. Beeler was an Investment Manager with Piper Jaffray
Ventures Technology Funds, a venture investing arm of Piper
Jaffray & Co., a financial services company.
Mr. Beeler received a B.A. in Economics from Colby College
and an M.B.A. in entrepreneurial studies from the Wharton School.
John
P. Guider
John P. Guider has served as Compellents Chief Operating
Officer since co-founding Compellent in March 2002. From July
1995 to August 2001, Mr. Guider served as Chief Operating
Officer of Xiotech, which Mr. Guider co-founded in July
1995. Xiotech was acquired by Seagate in January 2000. From 1987
to 1995, Mr. Guider served as Chief Technology Officer and
Senior Vice President of Product Development of Tricord Systems,
a high performance server company, which Mr. Guider
co-founded in 1987. From December 1982 to January 1987,
Mr. Guider served as Director of Hardware Development at
Star Technologies, a scientific computer company, and held
various management and technical positions with Sperry
Corporation, a mainframe systems company. Mr. Guider
received a B.S. in Electrical Engineering from the University of
Minnesota.
PROPOSAL 2
RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit Committee of the Board has selected Grant Thornton LLP
as our independent registered public accounting firm for the
year ending December 31, 2008 and has further directed that
management submit the selection of our independent registered
public accounting firm for ratification by the stockholders at
the Annual Meeting. Grant Thornton LLP has audited our financial
statements since the December 31, 2002 audit.
Representatives of Grant Thornton LLP are expected to be present
at the Annual Meeting. They will have an opportunity to make a
statement if they so desire and will be available to respond to
appropriate questions. For additional information regarding the
Audit Committee and its activities with Grant Thornton LLP, see
Information Regarding Our Board of Directors and
Corporate Governance and Report of the Audit
Committee of the Board of Directors.
Neither our bylaws nor other governing documents or law require
stockholder ratification of the selection of Grant Thornton LLP
as our independent registered public accounting firm. However,
the Audit Committee of the Board is submitting the selection of
Grant Thornton LLP to the stockholders for ratification as a
matter of good
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corporate governance. If the stockholders fail to ratify the
selection, the Audit Committee of the Board will reconsider
whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee of the Board in its discretion may
direct the appointment of a different independent registered
public accounting firm at any time during the year if they
determine that such a change would be in the best interests of
Compellent and our stockholders.
The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote
at the Annual Meeting will be required to ratify the selection
of Grant Thornton LLP. Abstentions will be counted toward the
tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes.
Broker non-votes are counted towards a quorum, but are not
counted for any purpose in determining whether this matter has
been approved.
Principal
Accountant Fees and Services
The following table represents aggregate fees billed to us for
the years ended December 31, 2007 and 2006, by Grant
Thornton LLP, our independent registered public accounting firm.
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Year Ended
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December 31,
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December 31,
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2007
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2006
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Audit Fees(1)
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$
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603,934
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$
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24,840
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Audit-related Fees(2)
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Tax Fees(3)
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32,130
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66,648
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All Other Fees(4)
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Total Fees
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$
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636,064
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$
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91,488
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(1)
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Audit
Fees. Consists
of fees billed for professional services rendered for the audit
of our year end financial statements and a review of the interim
financial statements included in our quarterly reports,
registration statements on
Forms S-1
and S-8 and
consents and services that are normally provided by Grant
Thornton LLP in connection with statutory and regulatory filings
or engagements.
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(2)
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Audit-Related
Fees. There
were no audit-related fees billed to us for services rendered
during 2007 and 2006.
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(3)
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Tax
Fees. These
services included federal and state tax compliance, tax planning
and tax advice during 2007 and 2006.
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(4)
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All Other
Fees. Grant
Thornton LLP did not provide any such products or services to us
during 2007 and 2006.
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In 2007, all fees described above incurred following our initial
public offering were pre-approved by the Audit Committee in
accordance with the Audit Committees pre-approval policies
and procedures.
Pre-Approval
Policies and Procedures
The Audit Committee has adopted a policy and procedures for the
pre-approval of audit and non-audit services rendered by our
independent registered public accounting firm, Grant Thornton
LLP. The policy generally requires Audit Committee pre-approval
of specified services in the defined categories of audit
services, audit-related services, and tax services up to
specified amounts. Pre-approval may also be given as part of the
Audit Committees approval of the scope of the engagement
of the independent registered public accounting firm or on an
individual explicit
case-by-case
basis before the independent registered public accounting firm
is engaged to provide each service. The pre-approval of services
may also be delegated to one or more of the Audit
Committees members, but the decision must be reported to
the full Audit Committee at its next scheduled meeting. Our
management has limited authority to engage Grant Thornton LLP to
perform limited services without Audit Committee pre-approval.
The Audit Committee has determined that the rendering of
services other than audit services by Grant Thornton LLP is
compatible with maintaining their independence.
THE
BOARD RECOMMENDS A VOTE FOR PROPOSAL 2.
7
INFORMATION
REGARDING OUR BOARD OF DIRECTORS AND CORPORATE
GOVERNANCE
Independence
of The Board of Directors
As required under The New York Stock Exchange Arca, or NYSE
Arca, listing standards, a majority of the members of a listed
companys Board must qualify as independent, as
affirmatively determined by the Board. The Board consults with
our outside counsel to ensure that the Boards
determinations are consistent with relevant securities and other
laws and regulations regarding the definition of
independent, including those set forth in pertinent
listing standards of the
NYSE Arca, as in
effect from time to time.
Consistent with these considerations, after review of all
relevant transactions or relationships between each director, or
any of his family members, and Compellent, our senior management
and our independent registered public accounting firm, the Board
has affirmatively determined that the following four directors
are independent directors within the meaning of the applicable
NYSE Arca listing standards: Messrs. Beeler, Sarkar, Spreng
and Wehrwein. In making this determination, the Board found that
none of these directors or nominees for director had a material
or other disqualifying relationship with Compellent.
Mr. Guider, our Chief Operating Officer, and
Mr. Soran, our President and Chief Executive Officer, are
not independent directors by virtue of their employment with us.
Meetings
of the Board of Directors
The Board of Directors met eight times during 2007. During 2007,
each Board member attended 75% or more of the aggregate of the
meetings of the Board and of the committees on which he served,
held during the period for which he was a director or committee
member.
As required under applicable NYSE Arca listing standards, in
2007, our non-management directors met in an executive session
at which only non-management directors were present.
Information
Regarding Committees of the Board of Directors
The Board of Directors has three standing committees: an Audit
Committee, a Compensation Committee and a Nominating and
Corporate Governance Committee. The following table provides
membership and meeting information for 2007 for each of the
Board committees:
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Nominating and
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Corporate
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Name
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Audit(1)
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Compensation(1)
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Governance(1)
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Charles Beeler
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X
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*
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X
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Neel Sarkar
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X
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X
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*
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R. David Spreng
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X
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X
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X
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Sven A. Wehrwein(2)
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X
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*
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X
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Total meetings in 2007
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4
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2
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1
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*
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Committee Chairperson
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(1)
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In connection with our initial
public offering of common stock, in August 2007, we
reconstituted our Audit Committee and Compensation Committee and
formed our Nominating and Corporate Governance Committee. Prior
to such event, in 2007, Messrs. Sarkar and Wehrwein served
on our Audit Committee with Andrew Healey, who served on our
Board and the Audit Committee until he resigned in July 2007,
and Messrs. Beeler, Sarkar and Spreng served on our
Compensation Committee. Robert F. Olson was appointed to our
Board and our Compensation Committee in July 2007.
Mr. Olson resigned from both the Board and the Compensation
Committee in August 2007, as it was determined that
Mr. Olson was not independent within the applicable listing
standards of NYSE Arca.
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(2)
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Mr. Wehrwein was appointed to
our Board in April 2007.
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8
Below is a description of each committee of the Board. The Board
has determined that, except as specifically described below with
regard to Mr. Spreng, each member of each committee meets
the applicable NYSE Arca rules and regulations regarding
independence and that each member is free of any
relationship that would impair his individual exercise of
independent judgment with regard to Compellent. The Audit,
Compensation and Nominating and Corporate Governance Committees
each have the authority to engage legal counsel or other experts
or consultants, as it deems appropriate to carry out its
responsibilities. Each of our Committees has adopted a written
charter that is available to stockholders on our website at
www.compellent.com, under the Investors
Corporate Governance tab. The contents of our website are
not part of this proxy statement.
Audit
Committee
Our Audit Committee was established by the Board to oversee our
corporate accounting and financial reporting processes and
audits of our financial statements. For this purpose, the Audit
Committee performs several functions:
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evaluating the performance of the independent registered public
accounting firm (taking into account, where appropriate, the
views of management), assessing their independence and
qualifications and determining and approving engagements of the
independent registered public accounting firm;
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determining whether to retain or to terminate the existing
independent registered public accounting firm or to appoint and
engage a new independent registered public accounting firm for
the following year;
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determining and approving engagements of the independent
registered public accounting firm, prior to commencement of such
engagements (unless in compliance with exceptions available
under applicable laws or rules related to immaterial aggregate
amounts of services), to perform any proposed permissible
non-audit services;
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monitoring the rotation of the partners of the independent
registered public accounting firm on our audit engagement team
as required by applicable laws and rules;
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conferring with management and the independent registered public
accounting firm, as appropriate, regarding the scope, adequacy
and effectiveness of internal control over financial reporting;
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establishing procedures for the receipt, retention and treatment
of complaints received by Compellent regarding accounting,
internal accounting controls or auditing matters and the
confidential and anonymous submission by employees of concerns
regarding questionable accounting or auditing matters; and
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reviewing, upon completion of the audit, the financial
statements proposed to be included in our Annual Report on
Form 10-K
to be filed with the Securities and Exchange Commission, or the
SEC, the quarterly financial statements and our disclosures
contained under the caption Managements Discussion
and Analysis of Financial Condition and Results of
Operations in our periodic reports.
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Our Board reviews the NYSE Arca listing standards definition of
independence for Audit Committee members on an annual basis and
has determined that all members of our Audit Committee are
independent (as independence is currently defined by NYSE Arca
listing standards). Our Board has determined that
Mr. Spreng does not meet the SEC requirements for
independence under
Rule 10A-3
of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, with respect to the Audit Committee due to his
affiliation with Crescendo Ventures, and therefore, is only
permitted to serve on the Audit Committee until October 8,
2008. Our Board has also determined that Mr. Wehrwein
qualifies as an audit committee financial expert, as
defined in applicable SEC rules. The Board made a qualitative
assessment of Mr. Wehrweins level of knowledge and
experience based on a number of factors, including his formal
education and experience as a chief financial officer for public
reporting companies and his status as a certified public
accountant. In addition to our Audit Committee,
Mr. Wehrwein also serves on the Audit Committees of Image
Sensing Systems, Inc., Synovis Life Technologies, Inc.,
Uroplasty, Inc. and Vital Images, Inc., each of which are
publicly traded companies. Our Board has determined that this
simultaneous service does not impair Mr. Wehrweins
ability to effectively serve on our Audit Committee.
9
Report of
the Audit Committee of the Board of Directors
The Audit Committee has reviewed and discussed the audited
financial statements for the year ended December 31, 2007
with management of Compellent and the independent registered
public accounting firm. The Audit Committee has discussed with
the independent registered public accounting firm the matters
required to be discussed by the Statement on Auditing Standards
No. 61, as amended (AICPA, Professional Standards,
Vol. 1. AU section 380), as adopted by the Public Company
Accounting Oversight Board, or PCAOB, in Rule 3200T. The
Audit Committee has also received the written disclosures and
the letter from the independent registered public accounting
firm required by the Independence Standards Board Standard
No. 1 (Independence Discussions with Audit
Committees), as adopted by the PCAOB in Rule 3600T and has
discussed with the independent registered public accounting firm
the independent registered public accounting firms
independence. Based on the foregoing, the Audit Committee has
recommended to the Board that the audited financial statements
be included in Compellents Annual Report in
Form 10-K
for the year ended December 31, 2007.
Mr. Sven A. Wehrwein (Chair)
Mr. Neel Sarkar
Mr. R. David Spreng
The material in this report is not soliciting
material, is not deemed filed with the
Commission and is not to be incorporated by reference in any of
our filings under the Securities Act or the Exchange Act,
whether made before or after the date hereof and irrespective of
any general incorporation language in any such filing, expect to
the extent specifically incorporated by referenced therein.
Compensation
Committee
The Compensation Committee acts on behalf of the Board to
review, adopt and oversee our compensation strategy, policies,
plans and programs, including:
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reviewing and approving corporate performance goals and
objectives relevant to the compensation of our executive
officers;
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evaluating and approving the compensation plans and programs
advisable for Compellent, as well as evaluating and approving
the modification or termination of existing plans and programs;
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establishing policies with respect to equity compensation
arrangements;
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reviewing regional and industry-wide compensation practices and
trends to assess the adequacy and competitiveness of our
executive compensation programs among comparable companies in
our industry;
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reviewing and approving the terms of any employment agreements,
severance arrangements, change-of-control protections and any
other compensatory arrangements (including, without limitation,
perquisites and any other form of compensation) for our
executive officers;
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evaluating the efficacy of our compensation policy and strategy
in achieving expected benefits to Compellent and otherwise
furthering the Committees policies; and
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reviewing with management our Compensation Discussion and
Analysis and considering whether to recommend that it be
included in our proxy statements and other filings.
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All the members of our Compensation Committee are independent
(as independence is currently defined in NYSE Arca listing
standards).
Compensation
Committee Interlocks and Insider Participation
From January 2007 through July 2007, our Compensation Committee
consisted of three directors: Messrs. Beeler, Sarkar and
Spreng. From July 2007 through August 2007, our Compensation
Committee consisted of four directors: Messrs. Beeler,
Olson, Sarkar and Spreng. Mr. Olson was appointed to
Compellents Board of Directors and Compensation Committee
in July 2007; however, Mr. Olson resigned from such
positions in August 2007, as it was determined that
Mr. Olson was not independent within the applicable listing
standards of NYSE Arca. From
10
August 2007 through December 2007, our Compensation Committee
consisted of three directors: Messrs. Beeler, Spreng and
Wehrwein. None of our executive officers currently serves, or
has served during the last completed fiscal year, as a member of
the board of directors or compensation committee of any entity
that has one or more executive officers serving as a member of
Compellents Board of Directors or Compensation Committee.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee of our Board
is responsible for, among other things:
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identifying, reviewing and evaluating candidates to serve as
directors of Compellent (consistent with criteria approved by
our Board);
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reviewing and evaluating incumbent directors, selecting or
recommending to the Board for selection candidates for election
to our Board, making recommendations to our Board regarding the
membership of the committees of our Board;
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assessing the performance of management and our Board; and
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developing a set of corporate governance principles for
Compellent.
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All members of our Nominating and Corporate Governance Committee
are independent (as independence is currently defined in the
NYSE Arca listing standards).
Board
Member Qualifications
Our Nominating and Corporate Governance Committee believes that
candidates for director should have certain minimum
qualifications, including the ability to read and understand
basic financial statements, being over 21 years of age and
having the highest personal integrity and ethics. Our Nominating
and Corporate Governance Committee also intends to consider such
factors as possessing relevant expertise upon which to be able
to offer advice and guidance to management, having sufficient
time to devote to the affairs of Compellent, demonstrated
excellence in his or her field, having the ability to exercise
sound business judgment and having the commitment to rigorously
represent the long-term interests of our stockholders. However,
the Nominating and Corporate Governance Committee retains the
right to modify these qualifications from time to time.
Candidates for director nominees are reviewed in the context of
the current composition of the Board, the operating requirements
of Compellent and the long-term interests of stockholders. In
conducting this assessment, the Nominating and Corporate
Governance Committee considers diversity, age, skills, and such
other factors as it deems appropriate given the current needs of
the Board and Compellent, to maintain a balance of knowledge,
experience and capability. In the case of incumbent directors
whose terms of office are set to expire, the Nominating and
Corporate Governance Committee reviews these directors
overall service to Compellent during their terms, including the
number of meetings attended, level of participation, quality of
performance, and any other relationships and transactions that
might impair the directors independence. In the case of
new director candidates, the Nominating and Corporate Governance
Committee also determines whether the nominee is independent for
NYSE Arca purposes, which determination is based upon applicable
NYSE Arca listing standards, applicable SEC rules and
regulations and the advice of counsel, if necessary. The
Nominating and Corporate Governance Committee then uses its
network of contacts to compile a list of potential candidates,
but may also engage, if it deems appropriate, a professional
search firm. The Nominating and Corporate Governance Committee
conducts any appropriate and necessary inquiries into the
backgrounds and qualifications of possible candidates after
considering the function and needs of the Board. The Nominating
and Corporate Governance Committee meets to discuss and consider
the candidates qualifications and then selects a nominee
for recommendation to the Board by majority vote.
The Nominating and Corporate Governance Committee will consider
director candidates recommended by stockholders. The Nominating
and Corporate Governance Committee does not intend to alter the
manner in which it evaluates candidates, including the minimum
criteria set forth above, based on whether or not the candidate
was recommended by a stockholder. Stockholders who wish to
recommend individuals for consideration by the Nominating and
Corporate Governance Committee to become nominees for election
to the Board may do so by delivering a written recommendation to
the Nominating and Corporate Governance Committee at the
following address:
c/o Compellent
Technologies, Inc., 7625 Smetana Lane, Eden Prairie, Minnesota
55344 at least 120 days
11
prior to the anniversary date of the mailing of our proxy
statement for the last Annual Meeting of Stockholders.
Submissions must include the full name of the proposed nominee,
a description of the proposed nominees business experience
for at least the previous five years, complete biographical
information, a description of the proposed nominees
qualifications as a director and a representation that the
nominating stockholder is a beneficial or record holder of our
stock. Any such submission must be accompanied by the written
consent of the proposed nominee to be named as a nominee and to
serve as a director if elected.
Stockholder
Communications With Our Board Of Directors
Compellents Board has adopted a formal process by which
stockholders may communicate with the Board or any of its
directors. Stockholders who wish to communicate with the Board
may do so by sending written communications addressed to the
Board of Directors of Compellent Technologies, Inc. at 7625
Smetana Lane, Eden Prairie, Minnesota 55344. These
communications will be reviewed by the Chair of the Audit
Committee, who will determine whether they should be presented
to the Board. The purpose of this screening is to allow the
Board to avoid having to consider irrelevant or inappropriate
communications (such as advertisements, solicitations and
hostile communications). The screening procedures have been
approved by the Board, including a majority of our independent
directors.
Code
of Business Conduct and Ethics
Our Code of Business Conduct and Ethics (which includes code of
ethics provisions applicable to our chief executive officer,
chief financial officer, principal accounting officer,
controller and persons performing similar functions) is
available on our website at www.compellent.com, under the
Investors Corporate Governance tab. The
contents of our website are not part of this proxy statement. If
we make any amendments to our Code of Business Conduct and
Ethics or grant any waiver from a provision of the code to any
executive officer or director, we will promptly disclose the
nature of the amendment or waiver on our website at the address
and the location specified above.
Corporate
Governance Guidelines
In 2007, our Board adopted Corporate Governance Guidelines to
assure that the Board and its Committees will have the necessary
authority and practices in place to review and evaluate our
business operations as needed and to make decisions that are
independent of our management. The guidelines are also intended
to align the interests of directors and management with those of
our stockholders. The Corporate Governance Guidelines set forth
the practices the Board intends to follow with respect to board
composition and selection, board meetings and involvement of
senior management, Chief Executive Officer performance
evaluation and succession planning, and board committees. The
Corporate Governance Guidelines may be viewed at
www.compellent.com, under the Investors
Corporate Governance tab. The contents of our website are
not part of this proxy statement.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors
and executive officers, and persons who own more than ten
percent of a registered class of our equity securities, to file
with the SEC initial reports of ownership and reports of changes
in ownership of common stock and other equity securities of
Compellent. Executive officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish
us with copies of all
Section 16(a)
forms they file.
To our knowledge, based solely on a review of the copies of such
reports furnished to us and written representations that no
other reports were required, during the year ended
December 31, 2007, all Section 16(a) filing
requirements applicable to our executive officers, directors and
greater than ten percent beneficial owners were complied with.
12
Director
Compensation
2007 Director
Compensation
In 2007, our non-employee directors did not receive any cash
compensation for their services as members of our Board or any
committee of the Board. Our non-employee directors were
reimbursed for reasonable travel, lodging and other expenses
incurred in connection with their attendance at Board or
committee meetings. As of December 31, 2007, none of our
non-employee directors held any stock options in Compellent. Our
employee directors did not receive any compensation in 2007 for
their service on our Board.
Mr. Wehrwein was appointed to our Board in April 2007. In
connection with Mr. Wehrweins appointment, he
received a fully vested stock award of 6,000 shares of our
common stock. In July 2007, Mr. Olson was appointed to our
Board. In August 2007, Mr. Olson resigned from our Board
after it was determined that he was not independent within the
applicable listing standards of NYSE Arca. In connection with
Mr. Olsons appointment to the Board, he received a
fully vested stock award of 4,000 shares of our common
stock, which he agreed to rescind in connection with his
resignation from our Board.
2007 Director
Compensation Table
The following table shows for the year ended December 31,
2007 certain information with respect to the compensation of our
non-employee directors:
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Stock
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Awards
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Total
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Name
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($)
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($)
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Charles Beeler
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Robert F. Olson
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Neel Sarkar
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R. David Spreng
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Sven A. Wehrwein
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$
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28,680
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(1)
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$
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28,680
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(1)
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The dollar amount represents the
compensation cost for 2007 for the stock award granted to
Mr. Wehrwein in connection with his appointment to our
Board. This amount has been calculated in accordance with FASB
Statement No. 123 (revised), Share-Based
Payment, or SFAS No. 123R, using a
Black-Scholes pricing model. This amount reflects our accounting
expense for the award and does not correspond to the actual
economic value that may be recognized by Mr. Wehrwein. The
grant date fair value of this award is $28,680, as determined by
our Board in good faith. As of December 31, 2007,
Mr. Wehrwein held 6,000 shares of our common stock,
pursuant to the stock award described above.
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2008
Compensation of Directors
In February 2008, our Board approved the following annual
compensation arrangement for our non-employee directors,
effective as of January 1, 2008, for such period of time as
a non-employee director continues to serve in such capacity
during the applicable calendar year:
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The non-employee members of the Board shall receive annual cash
compensation in the amount of $20,000 per year.
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The Chairperson of the Audit Committee shall receive annual cash
compensation in the amount of $22,000 per year. Each
non-chairperson member of the Audit Committee shall receive
annual cash compensation in the amount of $5,000 per year.
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The Chairperson of the Compensation Committee shall receive
annual cash compensation in the amount of $10,000 per year. Each
non-chairperson member of the Compensation Committee shall
receive annual cash compensation in the amount of $3,000 per
year.
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The Chairperson of the Nominating and Corporate Governance
Committee shall receive annual cash compensation in the amount
of $4,000 per year. Each non-chairperson member of the
Compensation Committee shall receive annual cash compensation in
the amount of $1,500 per year.
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The non-employee directors shall also be eligible for
reimbursement for expenses incurred in attending Board and
Committee meetings.
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All sums referenced above shall be payable on a pro rata basis
each quarter.
In February 2008, our Board also approved a stock option grant
for each non-employee director to purchase 60,260 shares of
our common stock. The shares subject to this stock option vest
1/36th per
month over a three year period. Vesting is contingent upon the
non-employee directors continued service. If a
non-employee directors service terminates immediately
prior to or within 12 months following a specified
change-in-control
transaction, the non-employee director may exercise the stock
option for a period of 12 months following the effective
date of such a transaction. The stock option term may also be
extended in the event that exercise of the stock option
following termination of service is prohibited by applicable
securities laws. In no event, however, may an option be
exercised beyond the expiration of its original term. If a
non-employee director is required to resign his position as a
condition of a
change-in-control
transaction or is removed as a director in connection with a
change-in-control
transaction, the unvested portion of the stock option shall vest
in full. In the event of certain significant corporate
transactions, if the surviving or acquiring entity or its parent
elects not to assume, continue or substitute such stock options,
then such stock options shall accelerate in full prior to the
effective time of such corporate transaction and such stock
options shall terminate if not exercised at or prior to the
effective time of the corporate transaction.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Introduction
This Compensation Discussion and Analysis provides information
regarding the compensation paid to our President and Chief
Executive Officer, our Chief Financial Officer, and our three
other executive officers who were the most highly compensated
executive officers of Compellent Technologies, Inc., or the
Named Executive Officers, as of December 31, 2007. These
individuals are:
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Philip E. Soran, Chairman, President and Chief Executive Officer;
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John R. Judd, Chief Financial Officer;
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John P. Guider, Chief Operating Officer;
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Lawrence E. Aszmann, Chief Technology Officer and
Secretary; and
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Dennis R. Johnson, Executive Vice President.
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In this Compensation Discussion and Analysis, Compellent
Technologies, Inc, is referred to as our,
us, we, or the Company.
Our
Compensation Philosophy
Our executive compensation program is shaped by the competitive
market for executives in the network storage industry and at
other public and private technology companies. We believe that
our executives compensation should be competitive with the
organizations with which we compete for talent. Consequently, we
have designed our executive compensation program to achieve the
following objectives:
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to attract and engage highly-qualified, experienced and
dedicated executives to manage and operate all aspects of our
business in an industry characterized by fierce competitiveness,
rapid growth, and a challenging and dynamic business environment;
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to motivate and reward these executives fairly;
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to retain those executives who continue to meet our high
expectations and support the achievement of our business
objectives;
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to be affordable within the parameters of our annual operating
plan; and
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to be fairly and equitably administered.
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Consistent with this philosophy, we primarily used base salary
and performance-based compensation to reward our Named Executive
Officers for helping us achieve our financial performance
objectives and overall corporate strategic objectives during
2007.
How We
Determine Compensation
The
Competitive Marketplace
The market for experienced executives is highly competitive in
the network storage industry. Since the inception of Compellent
in 2002, we have sought to recruit the most highly-qualified,
experienced, and dedicated executives to manage our business. In
doing so, we have drawn upon a talent pool that is highly sought
after by both large, established technology companies in our
geographic area and by other companies in the network storage
industry that are in developmental or early stage phases. The
competition for executives with the requisite management,
research and development and technical skills in the network
storage industry is fierce across our sector and we expect it to
remain high for the foreseeable future.
In this environment, we have tended to emphasize cash, rather
than equity, compensation in our executives compensation
packages. Accordingly, we have sought to match market cash
compensation levels and satisfy the day-to-day financial
requirements of our executives through competitive base salaries
and annual incentive compensation opportunities. Consistent with
this approach, in 2007, we targeted our executives
compensation generally at the market median for total cash
compensation, including base salary and incentive compensation
opportunities.
Historically, we have not benchmarked the targeted or actual
compensation of our executives against the compensation of
executives at other companies or used tally sheets. Instead, the
Committee gathered publicly-available compensation data from
other companies in the network storage industry or from
similarly-sized technology companies, but did not designate a
specific peer group for establishing compensation comparisons.
In targeting the market median, we use publicly-available
compensation data that matches our executives positions at
network storage and other similarly-sized technology companies
from which we are most likely to recruit key executives to
assess the competitive environment. We also factor in the
compensation practices in our specific geographical area to
ensure that our executives compensation, both in terms of
targeted total cash compensation, as well as the mix and amounts
of individual compensation elements, is competitive within our
industry.
Compensation
Committee
The Compensation Committee of our Board of Directors, or the
Committee, oversees and administers our executive compensation
program and approves executive compensation decisions. During
2007, the Committee took the following actions to ensure that
our executive compensation program was consistent with our
compensation philosophy:
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evaluated our compensation practices and assisted in developing
and formalizing our executive compensation program and
philosophy in advance of our initial public offering of shares
of our common stock;
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established a practice, in accordance with the applicable
listing standards of NYSE Arca, of prospectively reviewing the
performance and determining the compensation earned, paid, or
awarded to our President and Chief Executive Officer independent
of input from him;
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established a practice, in accordance with the applicable
listing standards of NYSE Arca, to review on an annual basis the
performance of our other executives with assistance from our
President and Chief Executive Officer and determine the
appropriate total compensation for each of them; and
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established a policy to specify grant dates for both new hire
and annual retention equity awards as a public reporting company.
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15
Ongoing
Compensation Decisions
Each year, the Committee conducts an annual review of the
aggregate level of our executives compensation, as well as
the mix of compensation elements. The Committee has not adopted
any formal guidelines for allocating total compensation between
cash and equity components. Instead, in determining the amount
and mix of compensation elements and whether each element
provides the correct incentives and rewards for performance
consistent with our annual and long-term objectives, the
Committee relies on its judgment about each executive rather
than adopting a formulaic approach to compensatory decisions it
believes is too narrowly responsive to short-term changes in
business performance. The Committee also does not use a fixed
weighting system between compensation elements for each
executive, but rather assesses each executives overall
contribution to the business, the scope of his responsibilities
and his historical performance to determine the executives
annual compensation. Historically, and during 2007, the
Committee has taken into account input from other independent
members of our Board of Directors based on their general
experience with companies in their investment portfolio.
The Committee also works with our President and Chief Executive
Officer to ensure that our executives are compensated in
accordance with our compensation philosophy. Typically, the
Committee meets following the end of the fiscal year to evaluate
the performance of each of our executives (including our
President and Chief Executive Officer), to discuss the President
and Chief Executive Officers recommendations (except with
respect to his compensation), and then to make its preliminary
decisions, in its sole discretion, relying principally on
industry data (as described above) as well as on its
members own experience as investors and directors of
similarly-situated network storage and other technology
companies. After the Committee has finalized its decisions, they
review and approve all of our compensation policies, including
the base salaries, annual incentive compensation awards, and
equity compensation awards for our executives.
During 2007, our President and Chief Executive Officer proposed
base salary adjustments and target annual incentive compensation
payments (except with respect to his own compensation) to the
Committee for its consideration for the Named Executive Officers
other than himself. He also played a key role in establishing
the performance targets under our annual incentive plan.
Compensation
Consultant
Prior to December 2007, the Committee had not engaged an
executive compensation consultant to assist it in developing our
compensation policies or in making compensation decisions. In
December 2007, the Committee retained Compensia, Inc., a
national executive compensation consulting firm, to conduct
market research and analysis on our various executive positions,
to assist the Committee in developing appropriate incentive
plans for our executives for 2008, to provide the Committee with
advice and ongoing recommendations regarding material executive
compensation decisions, and to review compensation proposals of
management. Other than the work they perform for the Committee,
Compensia has provided no other consulting services to
Compellent.
Compensation
Elements
For 2007, the compensation of our executives, including the
Named Executive Officers, consisted of the following elements:
Base
Salary
The base salaries of our Named Executive Officers are
established based on the scope of their responsibilities,
historical performance, and individual experience. Base salaries
are reviewed annually, and adjusted each year as the Committee
deems necessary and appropriate. Generally, salary adjustments
are effective on January 1st of each year. We have not
and do not intend to apply specific formulas to determine base
salary adjustments.
In establishing the 2007 base salaries of our Named Executive
Officers, the Committee took into consideration several factors,
including each Named Executive Officers seniority,
position and functional role, and scope of responsibility, as
well as general economic conditions. Ultimately, the Committee
decided that, where base salary increases were warranted, it
would limit such increases for our Named Executive Officers to
an amount intended to
16
offset inflation, which increases were in line with those given
to our employees generally. As a result, the Committee took the
following actions with respect to our Named Executive Officers:
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2006
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2007
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Annual
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Annual
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Percentage
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Salary
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Salary
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Increase
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Named Executive Officer
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($)
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($)
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(%)
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Philip E. Soran
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$
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275,000
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$
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290,000
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5
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%
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John R. Judd
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180,000
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189,000
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5
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John P. Guider
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250,000
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265,000
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6
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Lawrence E. Aszmann
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220,000
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230,000
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4
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Dennis R. Johnson
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200,000
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200,000
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The Committee determined that the 2006 base salary of
Mr. Johnson, our Executive Vice President, was sufficient,
given his role and responsibilities and to achieve our retention
goals, so it was kept constant for 2007.
Annual
Incentive Compensation
The Committee has the authority to make cash incentive awards to
our Named Executive Officers to reward the achievement of annual
performance objectives. Typically, these awards are intended to
compensate our Named Executive Officers for achieving financial
objectives based on corporate revenue targets and other value-
creating corporate objectives with a time horizon of one year or
less. Generally, awards have been historically paid on a
quarterly basis with respect to the achievement of the financial
objectives and in the first quarter of each fiscal year for the
prior fiscal years performance with respect to the
corporate objectives.
2007
Management Incentive Plan
In December 2006, the Committee, upon the recommendation of our
President and Chief Executive Officer (except with respect to
his own compensation), established individual target annual
incentive compensation award opportunities for each of our Named
Executive Officers under our 2007 Management Incentive Plan, or
the 2007 Incentive Plan. These target award opportunities were
determined based on a variety of factors, including the position
and functional role, scope of responsibilities, and total
compensation of each Named Executive Officer, and ranged from
20% to 50% of the respective Named Executive Officers
annual base salary. The target award opportunities were weighted
between financial and corporate objectives based on each Named
Executive Officers anticipated contribution to our
performance in 2007. The threshold award that a Named Executive
Officer could receive was 2% of his target annual incentive
compensation award opportunity associated with the achievement
of the financial objectives. To provide a way for the Committee
to recognize a truly exceptional individual contribution, there
was no defined maximum payment for either portion of the annual
incentive compensation award.
For 2007, the target annual incentive compensation award
opportunities and weightings for our Named Executive Officers
were as follows:
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Target
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Financial
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Corporate
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Cash
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Objectives
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Objective
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Payment
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Named Executive Officer
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(%)
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(%)
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($)
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Philip E. Soran
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71
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%
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29
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%
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$
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85,000
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John R. Judd
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78
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22
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45,000
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John P. Guider
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71
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29
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70,000
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Lawrence E. Aszmann
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78
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22
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45,000
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Dennis R. Johnson
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50
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50
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100,000
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Further, the Committee, upon the recommendation of our President
and Chief Executive Officer, selected corporate revenue as the
financial objective under the 2007 Incentive Plan. For 2007,
this metric was predicated on Compellent meeting the corporate
revenue target contained in our annual operating plan.
The Committee views the annual incentive compensation awards as
a reward for exceptional performance. Accordingly, the Committee
generally sets the target performance level for the financial
objective at a level that
17
would only be achieved if Compellent continued to substantially
improve on its past levels of performance, and if our executives
perform at very high levels. As a result, we believe the target
financial objective will be difficult to reach but is attainable
with significant effort. In 2006 (the first year in which we had
a similar type of plan in place), the financial objective was
exceeded, which was a bookings number, and our Named Executive
Officers were paid between 110% to 120% of their target amount.
Since our actual financial performance in any given fiscal year
is dependent on a variety of conditions and factors, including
our size and operating history relative to our competitors, the
fierce competitive environment for customers, and the overall
financial climate in the United States, the Committee believed
that meeting our corporate revenue target for the year would
present a significant challenge for our executives. The
Committee further believed that the financial objective under
the 2007 Incentive Plan would be difficult to achieve as it
represented a significant increase over our actual 2006
performance and required a high level of execution and
performance by our Named Executive Officers in order to receive
the full target incentive compensation award.
Financial
Objectives
Under the 2007 Incentive Plan, our Named Executive Officers were
to be paid 2% of their target annual incentive compensation
award opportunity for every $5 million in revenue up to
$25 million in revenue, with additional tiered payments
based on revenue in excess of $25 million. For 2007, we
recognized revenue of $51.2 million and, as a result, our
Named Executive Officers earned the following amounts, which
represented approximately 70% of the target award opportunity,
under the financial objectives portion of the 2007 Incentive
Plan:
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Cash
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Incentive
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Named Executive Officer
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Payment ($)
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Philip E. Soran
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$
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42,480
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John R. Judd
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24,780
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John P. Guider
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35,400
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Lawrence E. Aszmann
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24,780
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Dennis R. Johnson
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35,400
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Corporate
Objectives
In February 2008, the Committee evaluated our Named Executive
Officers performance to make its decisions about the
remainder of the annual incentive compensation awards payable
under the 2007 Incentive Plan. These awards were based on a
thorough review of Company performance, as well as consideration
of the Named Executive Officers performance against the
following corporate objectives:
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achievement of improved gross margins and enhanced product mix;
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delivery of product releases to the market on time with high
quality;
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achievement of other business objectives, including hiring
goals, implementation of systems infrastructure, expense
management, and high customer satisfaction;
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efficiency of cash usage; and
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successful capital raising efforts.
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While, generally, the Committee considered the Named Executive
Officers (other than Mr. Johnson, as described below) as a
group on the basis of their performance against these
objectives, under the 2007 Incentive Plan it also had the
discretion to consider and weigh each executives
individual contribution to the achievement of the objectives and
to increase or decrease the portion of the executives
award based on this assessment. The Committee exercised this
discretion with respect to the 2007 Incentive Plan, in
recognition of the contribution of each Named Executive Officer
to our successful initial public offering in October 2007 and
other significant events throughout 2007 by compensating each
Named Executive Officer at a range between approximately 140%
and
18
400% of their target award opportunity for the achievement of
the corporate objectives under the 2007 Incentive Plan, with
actual award amounts ranging between $27,000 and $93,000.
The Committee determined that our executives had significantly
exceeded the corporate objectives under the 2007 Incentive Plan,
based in part on the following:
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improved our gross margins by 3% from 46% in 2006 to 49% in 2007;
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delivered multiple new software and hardware features throughout
2007, including the NAS offering, server instant replay,
enterprise manager enhancements, thin import, fast track and
Series 30 controllers;
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hired 82 additional people in 2007;
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improved cash flow from operations; and
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raised net proceeds of $84.6 million in our initial public
offering.
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As a result, our Named Executive Officers were paid the
following amounts under the corporate objectives portion of the
2007 Incentive Plan:
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Cash
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Incentive
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Payment
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Named Executive Officer
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($)(1)
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Philip E. Soran
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$
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92,520
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John R. Judd
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40,220
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John P. Guider
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49,600
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Lawrence E. Aszmann
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27,720
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(1)
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For purposes of the
Summary Compensation Table the portion of
each Named Executive Officers cash incentive payment
attributable to the corporate objectives portion of the 2007
Incentive Plan in excess of the target amount is characterized
as a bonus.
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The corporate objectives under the 2007 Incentive Plan of
Mr. Johnson, our Executive Vice President, were to secure
certain strategic customers at specified revenue amounts, which
amounts were subject to modification by the Committee during
2007. Mr. Johnsons annual incentive compensation
award for securing the designated strategic customers in 2007
was $69,600. The Committee elected to pay Mr. Johnson in
excess of the amount earned by Mr. Johnson under the 2007
Incentive Plan based on the long-term strategic value of the
accounts that Mr. Johnson brought in to Compellent in 2007.
Under the 2007 Incentive Plan, the Committee retained the
discretion to increase, reduce, or eliminate annual incentive
compensation awards or make awards even if the financial or
corporate objectives are not achieved. As described above, the
Committee exercised this discretion with respect to the 2007
Incentive Plan to increase the amounts payable for the
achievement of the corporate objectives portion of the plan for
each of our Named Executive Officers.
Discretionary
Bonuses
The Committee has the authority to award discretionary bonuses
to our Named Executive Officers from time to time.
Except as follows, the Committee did not award any discretionary
bonuses to any of the Named Executive Officers in 2007. In March
2007, the Committee awarded discretionary cash bonuses to
Mr. Judd, our Chief Financial Officer, and
Mr. Johnson, our Executive Vice President, of $17,100 and
$3,800, respectively, to offset the tax liability incurred by
each of them with respect to holding exercised stock from June
2006 to March 2007. These bonuses were paid for retention
purposes.
19
Long-Term
Incentive Compensation
We believe that long-term performance is achieved through an
ownership culture that encourages such performance by our Named
Executive Officers through the use of equity-based awards. Our
equity compensation plans have been established to provide our
employees, including our Named Executive Officers, with
incentives to help align their interests with the interests of
our stockholders. The Committee believes that the use of equity
and equity-based awards offers the best approach to achieving
our overall compensation goals. Throughout our history, the
Committee has used stock options as its sole long-term equity
incentive award.
Typically, the Committee makes decisions with respect to the
grant of stock options to our Named Executive Officers, taking
into consideration the recommendations of our President and
Chief Executive Officer (except with respect to his own
compensation). The size of these option awards reflects past
individual and Company performance, expected future
contribution, the retention value of unvested stock and stock
options held by each Named Executive Officer, and the estimated
value of the awards compared with equity awards offered to
executives in similar positions by companies within and outside
our industry.
In 2007 and prior to the adoption of our Equity Awards Policy
described below, stock options granted to our employees,
including the Named Executive Officers, in 2007 were granted
with an exercise price that was not less than the fair market
value of the shares of our common stock as determined in good
faith by our Board on the date of grant. In the absence of a
public trading market for our common stock, our Board determined
the fair market value of our common stock in good faith based
upon consideration of a number of relevant factors, including
our revenue growth, results of operations, financial status and
market conditions.
In March and April 2007, we repurchased certain shares held by
Messrs. Judd and Johnson, respectively, and granted them
certain stock options and committed to pay each of them a
related bonus as described under Certain Relationships
and Related Party Transactions in this proxy
statement. We entered into these transactions in an attempt to
help Messrs. Johnson and Judd mitigate unintended negative
tax consequences that arose when they exercised stock options
before the underlying shares vested.
On May 30, 2007, the Committee granted Mr. Judd, Chief
Financial Officer, a stock option to purchase 20,000 shares
of our common stock with an exercise price of $9.68 per share,
in recognition of the performance of his duties and
responsibilities as our Chief Financial Officer.
Messrs. Soran, Guider and Aszmann did not receive any stock
option grants in 2007.
We have not adopted stock ownership guidelines, and, other than
for our co-founders, our equity compensation plans have provided
the primary means for our Named Executive Officers to acquire
equity or equity-based interests in Compellent.
Equity
Award Practices
In November 2007, the Committee adopted an equity awards policy,
or Equity Awards Policy, that requires us to grant equity awards
in accordance with certain guidelines. In accordance with this
policy, the exercise price for all equity awards will be the
Fair Market Value of our common stock as determined
in accordance with the terms of our 2007 Equity Incentive Plan,
which is the closing market price for our common stock as
reported on the NYSE Arca on the grant date.
New Hire
Grants
Pursuant to the Equity Awards Policy, the Committee has
delegated to either Mr. Soran, our President and Chief
Executive Officer, or Mr. Guider, our Chief Operating
Officer, the authority to grant stock options to new hires who
are not persons subject to the reporting requirements of
Section 16 of the Securities Exchange Act of 1934, as
amended, or the Excluded Persons. These options must be granted
on the date on which each such employee commences employment
with us, regardless of whether a blackout period under our
insider trading policy is in effect. New hire grants to Excluded
Persons must be approved by the Committee at a meeting of the
Committee or through action by unanimous written consent and may
only be made when a blackout period under our insider
20
trading policy is in effect. No employee may be granted an
equity award with a grant date prior to date that such person
commenced employment with us.
Annual
Grants
Pursuant to the Equity Awards Policy, annual equity awards must
generally be approved by the Committee at a regular meeting of
the Committee. Such annual equity awards will be granted on the
third business day following the public release of our prior
fiscal year financial results, which generally occurs in the
first week of February of each year, regardless of whether a
blackout period under our insider trading policy is in effect.
We have not repriced outstanding stock options, nor have we
replaced options where our stock price has declined following
the grant date.
Other
Compensation and Benefits
Welfare
Benefits
We provide a number of benefit programs to meet the health care
and welfare needs of our employees and their families, including
medical and prescription drug coverage, dental and vision
programs, short-term disability insurance, long-term disability
insurance, accidental death and dismemberment insurance, medical
and dependent care flexible spending accounts, and group life
insurance, as well as customary vacation, paid holiday, leave of
absence, and other similar policies. Our Named Executive
Officers are eligible to participate in these programs on the
same basis as our other salaried employees.
Perquisites
We provide Messrs. Soran, Aszmann, and Guider, our
co-founders, with an annual allowance of $1,000 for a medical
physical examination. In 2007, none of these Named Executive
Officers used this allowance. The Committee has not found it
necessary for the attraction or retention of our Named Executive
Officers to provide them with perquisites or other personal
benefits except as described in the preceding sentence. In the
future, the Committee, in its discretion, may revise, amend, or
add to any Named Executive Officers perquisites and other
personal benefits as it deems advisable.
Retirement
Benefits
Other than the tax-qualified Section 401(k) plan described
below, we do not currently maintain, nor do we have plans to
provide, pension arrangements, retirement plans, or nonqualified
deferred compensation plans for our Named Executive Officers.
Employee
Stock Purchase Plan
In conjunction with the initial public offering of shares of our
common stock, we implemented a tax-qualified
Section 423 employee stock purchase plan for our
employees. The Named Executive Officers are eligible to
participate in this plan on the same basis as our other salaried
employees.
Section 401(k)
Plan
We maintain a defined contribution employee retirement plan, or
401(k) plan, for our employees. Our Named Executive Officers are
also eligible to participate in the 401(k) plan on the same
basis as our other employees. The 401(k) plan is intended to
qualify as a tax-qualified plan under Section 401(k) of the
Internal Revenue Code, or Code. The plan provides that each
participant may contribute up to the statutory limit, which was
$15,500 for calendar year 2007. Participants that are
50 years or older can also make
catch-up
contributions, which in calendar year 2008 may be up to an
additional $5,000 above the statutory limit. The plan permits us
to make discretionary contributions and matching contributions,
subject to established limits and a vesting schedule. In 2007,
we did not make any discretionary or matching contributions to
the 401(k) plan on behalf of our Named Executive Officers.
21
Employment
Agreements
In connection with the founding of Compellent in 2002,
Mr. Soran, our President and Chief Executive Officer,
Mr. Guider, our Chief Operating Officer, and
Mr. Aszmann, our Chief Technology Officer, executed
employment agreements setting out the material terms of their
employment with Compellent. These agreements were modified and
restated in August 2007. In addition, in August 2007, we entered
into an employment agreement with Mr. Johnson, our
Executive Vice President. Generally, these agreements provide
that these executives are at will employees and
that, for a period of six months following their termination of
employment (12 months in the case of Mr. Johnson),
they will be subject to certain restrictions on competition with
Compellent and on the solicitation of our employees, customers,
and clients. These agreements also provide these executives with
certain severance benefits, as described below. We mutually
agreed with Mr. Johnson to terminate the severance
arrangements under our employment agreement with him in February
2008, when he informed us that he intended to retire in June
2008. The other provisions of his agreement relating to
restrictions on competition and the solicitation of employees
remain in full force and effect.
Other than these arrangements, we do not have employment
agreements with our Named Executive Officers. The material terms
of the employment agreements with our Named Executive Officers
are described below under Executive
Compensation Employment Agreements below.
Severance
Arrangements
Our co-founders, Messrs. Soran, Guider and Aszmann are
entitled to a lump sum payment equal to six months of base
salary and payments for six months of continued health insurance
coverage, subject to the Named Executive Officers
execution of a binding release of claims, if his employment with
us is terminated. The material terms of these arrangements are
described under Executive Compensation
Potential Payments Upon Termination or
Change-in-Control
below.
The Committee believes that these payments and benefits are an
essential element of our executive compensation program and
assist us in recruiting and retaining talented individuals. The
Committee approved these arrangements in light of its
members experience with executive employment terminations.
In setting the terms of and determining whether to approve such
arrangements, the Committee recognized that executives often
face challenges securing new employment following termination of
employment. The severance payments and benefits are composed of
cash payments and continued health care coverage for a limited
period of time. The cash payments and benefits coverage
correspond to the period of time that the Committee believes it
would take the affected Named Executive Officer to obtain
employment following their separation from Compellent.
The Committee has engaged Compensia to assess our compensation
practices with regard to severance and may adopt new agreements
for our Named Executive Officers relating to severance in the
future.
Change-in-Control
Arrangements
In the event of a
change-in-control
of Compellent, under the terms of their individual equity award
agreements pursuant to our 2002 Stock Option Plan, the vesting
of such equity awards for the Named Executive Officers then
providing service for us, will be accelerated such that 75% of
the aggregate number of shares subject to the equity award will
immediately vest, if not previously vested in full. These
provisions are provided to motivate our Named Executive Officers
to act in the best interests of our stockholders when
negotiating a corporate transaction by removing the distraction
of post-change-in-control uncertainties faced by our Named
Executive Officers with regard to their continued compensation.
Under our 2007 Equity Incentive Plan, all employees, including
our Named Executive Officers, may also be entitled to
accelerated vesting of a portion of their outstanding stock
awards upon a
change-in-control
of Compellent in the event their stock awards are not assumed by
the acquiror. In the event of a corporate transaction or a
change-in-control,
outstanding stock awards under our 2007 Equity Incentive Plan
may be assumed, continued, or substituted for by the surviving
corporation. If the surviving corporation does not assume,
continue, or substitute such stock awards, then (a), in the case
of any stock awards that are held by individuals performing
services for us immediately prior to the effective time of the
transaction, the vesting and exercisability provisions of such
stock
22
awards will be accelerated in full and such stock awards will be
terminated if not exercised prior to the effective date of the
corporate transaction or
change-in-control,
and (b) all other outstanding stock awards will be
terminated if not exercised on or prior to the effective date of
the corporate transaction or
change-in-control.
The acceleration of a stock award in the event of an acquisition
or similar corporate event may be viewed as an anti-takeover
provision, which may have the effect of discouraging a proposal
to acquire or otherwise obtain control of Compellent. We believe
that the terms of the plan are consistent with industry practice.
Our Named Executive Officers do not have individual agreements
or arrangements that provide for additional or accelerated cash
compensation upon a
change-in-control
of Compellent as of the date of this proxy statement. The
Committee has engaged Compensia to assess our compensation
practices in this area and may adopt agreements with additional
or accelerated cash or additional equity acceleration upon a
change-in-control
of Compellent with our Named Executive Officers in the future.
Tax and
Accounting Considerations
Section 162(m) of the Code limits the amount that we may
deduct from our federal income taxes for remuneration paid to
our President and Chief Executive Officer and our three other
most highly compensated executive officers (other than our Chief
Financial Officer) to $1 million per executive per year,
unless certain requirements are met. Section 162(m)
provides an exception from this deduction limitation for certain
forms of performance-based compensation, which
includes the gain recognized by an executive upon the exercise
of qualifying compensatory stock options.
We believe that the stock options that we have granted in the
past to our executives have satisfied this exception under
Section 162(m). While the Committee has not adopted a
formal policy regarding the tax deductibility of the
compensation paid to our executives, it intends to consider this
deductibility issue under Section 162(m) as a factor in
future compensation decisions.
We adopted Statement of Financial Accounting Standards
No. 123R on January 1, 2006. SFAS No. 123R
establishes the accounting treatment for stock-based awards
exchanged for employee services. Generally, stock-based
compensation cost is measured at grant date, based on an
awards fair value, and is recognized for
financial reporting purposes as an expense over the requisite
employee service period. The Committee has determined that, for
the foreseeable future, the sole component of our long-term
incentive compensation program will consist of stock options.
Therefore, we will record this compensation expense in our
financial statements on an ongoing basis according to
SFAS No. 123R.
Summary
Compensation Table
The following table shows for the years ended December 31,
2007 and 2006, compensation awarded to or paid to, or earned by,
our Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
Name and
|
|
|
|
|
|
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
Principal
|
|
|
|
Salary
|
|
Bonus(1)
|
|
Awards(2)
|
|
Compensation(3)
|
|
Compensation
|
|
Total
|
Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Mr. Philip E. Soran
|
|
|
2007
|
|
|
$
|
290,000
|
|
|
$
|
67,520
|
|
|
|
$3,542
|
|
|
|
$67,480
|
|
|
|
|
|
|
$
|
428,542
|
|
Chairman, President
and Chief Executive Officer
|
|
|
2006
|
|
|
|
275,000
|
|
|
|
|
|
|
|
2,656
|
|
|
|
84,000
|
|
|
|
|
|
|
|
361,656
|
|
Mr. John R. Judd
|
|
|
2007
|
|
|
|
189,000
|
|
|
|
30,220
|
|
|
|
56,707
|
|
|
|
34,780
|
|
|
$
|
17,100
|
(5)
|
|
|
327,807
|
|
Chief Financial Officer(4)
|
|
|
2006
|
|
|
|
93,462
|
|
|
|
|
|
|
|
9,563
|
|
|
|
37,500
|
|
|
|
|
|
|
|
140,525
|
|
Mr. John P. Guider
|
|
|
2007
|
|
|
|
265,000
|
|
|
|
29,600
|
|
|
|
3,542
|
|
|
|
55,400
|
|
|
|
|
|
|
|
353,542
|
|
Chief Operating Officer
|
|
|
2006
|
|
|
|
250,000
|
|
|
|
|
|
|
|
2,656
|
|
|
|
67,000
|
|
|
|
|
|
|
|
319,656
|
|
Mr. Lawrence E. Aszmann
|
|
|
2007
|
|
|
|
230,000
|
|
|
|
17,720
|
|
|
|
3,542
|
|
|
|
34,780
|
|
|
|
|
|
|
|
286,042
|
|
Chief Technology Officer and Secretary
|
|
|
2006
|
|
|
|
220,000
|
|
|
|
|
|
|
|
2,656
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|
|
|
34,000
|
|
|
|
|
|
|
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256,656
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Mr. Dennis R. Johnson
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2007
|
|
|
|
200,000
|
|
|
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19,600
|
|
|
|
7,936
|
|
|
|
85,400
|
|
|
|
3,800
|
(5)
|
|
|
316,736
|
|
Executive Vice President
|
|
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2006
|
|
|
|
200,000
|
|
|
|
|
|
|
|
5,136
|
|
|
|
185,493
|
(6)
|
|
|
|
|
|
|
390,629
|
|
23
|
|
|
(1)
|
|
Represents discretionary bonus
amounts paid in excess of the corporate targets to such
individuals pursuant to our 2007 Incentive Plan, which is
discussed in greater detail in Compensation Discussion
and Analysis.
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|
(2)
|
|
The dollar amounts in this column
represent the compensation cost for the indicated year of stock
option awards granted pursuant to our equity compensation plans
and thus include amounts from outstanding stock option awards
granted in and prior to the indicated year. These amounts have
been calculated in accordance with SFAS No. 123R using
the Black-Scholes option-pricing model. Pursuant to SEC rules,
the amounts shown exclude the impact of estimated forfeitures
related to service-based vesting conditions. No stock options
were forfeited by any of our Named Executive Officers during
2007 or 2006. For additional information regarding the
assumptions used in the calculation of these amounts, please
refer to Note 1 to our audited consolidated financial
statements included in our Annual Report on
Form 10-K
filed with the Securities and Exchange Commission on
March 27, 2008. See the Grants of Plan-Based
Awards Table for 2007 for information on awards made
in 2007. These amounts reflect our accounting expense for these
awards and do not correspond to the actual value that may be
recognized by our Named Executive Officers.
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(3)
|
|
Represents cash incentive payments
for the achievement of financial objectives and a portion of the
corporate objectives under our 2007 Incentive Plan, which is
discussed in greater detail in Compensation Discussion
and Analysis.
|
|
(4)
|
|
Mr. Judd joined us as our
Chief Financial Officer in June 2006.
|
|
(5)
|
|
Represents amount paid as a
gross up for tax liabilities incurred by such Named
Executive Officer with respect to holding our stock pursuant to
the exercise of a stock option award.
|
|
(6)
|
|
Represents $155,493 earned by
Mr. Johnson during 2006 under our sales commission plan and
$30,000 related to the achievement of certain corporate
objectives under our 2006 Incentive Plan.
|
Grants
of Plan-Based Awards Table For 2007
The following table shows certain information regarding grants
of plan-based awards made to our Named Executive Officers during
the year ended December 31, 2007:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: Number
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Securities
|
|
|
Exercise or Base
|
|
|
Date Fair
|
|
|
|
|
|
|
|
Estimated Possible Payouts Under Non-Equity Incentive Plan
Awards
|
|
|
Underlying
|
|
|
Price of Option
|
|
|
Value of Option
|
|
|
|
Grant
|
|
Approval
|
|
Threshold
|
|
|
Target
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
Date
|
|
Date
|
|
($)(1)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($/Sh)(2)
|
|
|
($)
|
|
|
Mr. Soran
|
|
N/A
|
|
N/A
|
|
$
|
1,700
|
|
|
|
$85,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Judd
|
|
N/A
|
|
N/A
|
|
|
900
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/28/07
|
|
03/07/07
|
|
|
|
|
|
|
|
|
|
|
90,000
|
(3)
|
|
$
|
1.25
|
|
|
|
$35,714
|
(4)
|
|
|
05/30/07
|
|
05/30/07
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(5)
|
|
|
9.68
|
|
|
|
112,000
|
(6)
|
Mr. Guider
|
|
N/A
|
|
N/A
|
|
|
1,400
|
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Aszmann
|
|
N/A
|
|
N/A
|
|
|
900
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Johnson
|
|
N/A
|
|
N/A
|
|
|
2,000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/28/07
|
|
03/07/07
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(7)
|
|
|
1.25
|
|
|
|
7,936
|
(4)
|
|
|
|
(1)
|
|
These columns set forth the
threshold and target annual cash incentive payments for 2007
under our 2007 Incentive Plan for each of our Named Executive
Officers. The actual cash incentive payment earned for 2007 for
each of our Named Executive Officers is set forth in the
Summary Compensation Table above. As such,
the amounts set forth in these columns do not represent
additional compensation earned by our Named Executive Officers
for 2007. There was no maximum cash incentive payment under our
2007 Incentive Plan. For more information regarding our 2007
Incentive Plan and the cash incentive payments made to our Named
Executive Officers in 2007, please see Compensation
Discussion and Analysis.
|
|
(2)
|
|
The stock options were granted with
an exercise price that was not less than the fair market value
of the shares of our common stock as determined in good faith by
the Board of Directors on the date of grant as our common stock
was not publicly traded on the date of grant.
|
|
(3)
|
|
Represents a stock option granted
pursuant to Compellents 2002 Stock Option Plan. The shares
subject to this option vest over a four year period, with 1/4th
of the shares subject to such stock option vesting on
June 26, 2007, and 1/48th of the shares subject to such
stock option vesting on a monthly basis thereafter. Vesting is
contingent upon continued service.
|
|
(4)
|
|
These amounts represent the
incremental fair value computed as of the modification date in
accordance with SFAS No. 123R. These stock options
were granted March 2007 in connection with the repurchase of the
same number of shares acquired by
|
24
|
|
|
|
|
each of the Named Executive
Officers pursuant to the exercise of stock options in a prior
fiscal year. Please see Certain Transactions with
Related Persons Stock Repurchases, Stock Option
Grants and Bonuses for more information with respect
to these grants. For financial reporting purposes, these options
were treated as a modification of the grants issued in a prior
fiscal year. For additional information with respect to the
financial reporting of the grants, please refer to Note 6
to our audited consolidated financial statements included in our
Annual Report on
Form 10-K
filed with the Securities and Exchange Commission on
March 27, 2008.
|
|
(5)
|
|
Represents a stock option granted
pursuant to Compellents 2002 Stock Option Plan. The shares
subject to this option vest over a four year period, with 1/4th
of the shares subject to such stock option vesting on
May 30, 2008, and 1/48th of the shares subject to such
stock option vesting on a monthly basis thereafter. Vesting is
contingent upon continued service.
|
|
(6)
|
|
This amount represents the full
grant date fair value of stock options granted to Mr. Judd.
The full grant date fair value is the amount that we would
expense in our financial statements over the awards
vesting schedule. See Note 2 of the Summary
Compensation Table for a discussion on the fair value
calculations related to stock options in this table.
|
|
(7)
|
|
Represents a stock option granted
pursuant to Compellents 2002 Stock Option Plan. The shares
subject to this option vest over a ten-month period, with 1/10th
of the shares subject to such stock option vesting on
April 16, 2007 and the remaining shares vesting in equal
amounts on a monthly basis thereafter. Vesting is contingent
upon continued service.
|
Outstanding
Equity Awards Table At December 31, 2007
The following table shows certain information regarding
outstanding equity awards at December 31, 2007 held by our
Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
|
Options
|
|
|
Options
|
|
|
Option
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Exercise Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(2)
|
|
|
Mr. Soran
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,557
|
(1)
|
|
$
|
969,101
|
|
Mr. Judd
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,251
|
(3)
|
|
|
676,700
|
|
|
|
|
20,000
|
(4)
|
|
|
|
|
|
$
|
9.68
|
|
|
|
5/29/2017
|
|
|
|
|
|
|
|
|
|
Mr. Guider
|
|
|
133,333
|
(5)
|
|
|
|
|
|
$
|
0.30
|
|
|
|
5/2/2016
|
|
|
|
|
|
|
|
|
|
Mr. Aszmann
|
|
|
133,333
|
(5)
|
|
|
|
|
|
$
|
0.30
|
|
|
|
5/2/2016
|
|
|
|
|
|
|
|
|
|
Mr. Johnson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
(6)
|
|
|
24,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
(7)
|
|
|
24,060
|
|
|
|
|
(1)
|
|
Represents 80,557 shares
acquired pursuant to the early exercise of a stock option to
purchase 133,333 shares of our common stock that are
subject to our right of repurchase in the event the Named
Executive Officers employment with us terminates, which
lapsed as to 1/4th of the exercised shares on May 3, 2007,
and as to 1/48th of the exercised shares on a monthly basis
thereafter. As of December 31, 2007, 52,776 of the shares
were vested and the remaining 80,557 shares will vest
monthly thereafter over the remainder of the vesting period. See
Options Exercised and Stock Vested Table in 2007
below for further information regarding the shares that
vested in 2007.
|
|
(2)
|
|
The value of the shares that have
not vested as of December 31, 2007 is based on the per
share closing price of Compellents common stock on
December 31, 2007 of $12.03 as reported by NYSE Arca.
|
|
(3)
|
|
Represents 56,251 shares
acquired pursuant to the early exercise of a stock option to
purchase 90,000 shares of our common stock that are subject
to our right of repurchase in the event the Named Executive
Officers employment with us terminates, which lapsed as to
1/4th of the exercised shares on June 26, 2007, and as to
1/48th of the exercised shares on a monthly basis thereafter. As
of December 31, 2007, 33,749 of the shares were vested and
the remaining 56,251 shares will vest monthly thereafter
over the remainder of the vesting period. See Options
Exercised and Stock Vested Table in 2007 below for
further information regarding the shares that vested in 2007.
|
|
(4)
|
|
The shares subject to this stock
option vest over a four year period, with 1/4th of the shares
subject to the stock option vesting on May 30, 2008, and
1/48th of the shares subject to the stock option vesting monthly
thereafter. Vesting is contingent upon continued service and the
stock option may be exercised prior to vesting, subject to our
right of repurchase in the event the Named Executive
Officers employment with us terminates. As of
December 31, 2007, none of the shares were vested, on
|
25
|
|
|
|
|
May 30, 2008 5,000 of the
shares will vest and the remaining 15,000 shares will vest
monthly thereafter over the remainder of the vesting period.
|
|
(5)
|
|
The shares subject to each stock
option vest over a four year period, with 1/4th of the shares
subject to the stock option vesting on May 3, 2007, and
1/48th of the shares subject to the stock option vesting monthly
thereafter. Vesting is contingent upon continued service and the
stock option may be exercised prior to vesting, subject to our
right of repurchase in the event the Named Executive
Officers employment with us terminates. As of
December 31, 2007, 52,776 of the shares were vested and the
remaining 80,557 shares will vest monthly thereafter over
the remainder of the vesting period.
|
|
(6)
|
|
Represents 2,000 unvested shares
acquired pursuant to the early exercise of a stock option to
purchase 20,000 shares of our common stock that are subject
to our right of repurchase in the event the Named Executive
Officers employment with us terminates, which lapsed as to
1/2 of the exercised shares on January 1, 2007, and as to
1/24th of the exercised shares on a monthly basis thereafter. As
of December 31, 2007, 46,000 of the shares were vested and
the remaining 2,000 shares vested on January 1, 2008.
See Options Exercised and Stock Vested Table in
2007 below for further information regarding the
shares that vested in 2007.
|
|
(7)
|
|
Represents 2,000 unvested shares
acquired pursuant to the early exercise of a stock option to
purchase 48,000 shares of our common stock that are subject
to our right of repurchase in the event the Named Executive
Officers employment with us terminates, which lapsed as to
1/10th of the exercised shares on April 16, 2007 and as to
1/10th of the exercised shares on a monthly basis thereafter. As
of December 31, 2007, 18,000 of the shares were vested and
the remaining 2,000 shares vested on January 16, 2008.
See Options Exercised and Stock Vested Table in
2007 below for further information regarding the
shares that vested in 2007.
|
Options
Exercised and Stock Vested Table in 2007
Our Named Executive Officers did not exercise any vested stock
options in 2007. The following table shows for the year ended
December 31, 2007, certain information regarding the
vesting of stock awards held by our Named Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
Stock Awards(1)
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired
|
|
|
Realized
|
|
|
|
on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)(2)
|
|
|
Mr. Soran
|
|
|
52,776
|
|
|
$
|
561,483
|
|
Mr. Judd
|
|
|
33,749
|
|
|
|
426,941
|
|
Mr. Guider
|
|
|
|
|
|
|
|
|
Mr. Aszmann
|
|
|
|
|
|
|
|
|
Mr. Johnson
|
|
|
18,000
|
|
|
|
224,400
|
|
|
|
|
46,000
|
|
|
|
228,500
|
|
|
|
|
(1)
|
|
Represents shares acquired pursuant
to the early exercise of unvested stock options that vested
during 2007.
|
|
(2)
|
|
The value realized upon vesting was
calculated by multiplying the number of shares that vested on
each respective vesting date by the fair market value or closing
price of our common stock on each such vesting date as
determined in good faith by our Board (prior to our initial
public offering) or as reported by NYSE Arca (following our
initial public offering), respectively.
|
26
Employment
Agreements
We are party to the following employment agreements with our
Named Executive Officers.
Philip E. Soran. In August 2007, we amended
and restated our employment agreement with Mr. Soran, our
President and Chief Executive Officer. Mr. Sorans
employment agreement provides that he is an at-will
employee and his employment may be terminated at any time by us
or Mr. Soran. For a period of six months after his
termination of employment, Mr. Soran will be subject to
certain restrictions on competition with us and on the
solicitation of our employees, customers and clients.
Mr. Sorans employment agreement also entitles him to
an annual allowance of $1,000 for a medical physical
examination, to participate in our cash incentive program and to
participate in our general employee benefit plans in accordance
with the terms and conditions of such plans. The employment
agreement also provides Mr. Soran with certain severance
benefits. See Executive Compensation
Potential Payments upon Termination or
Change-in-Control
below.
John P. Guider. In August 2007, we amended and
restated our employment agreement with Mr. Guider, our
Chief Operating Officer. Mr. Guiders employment
agreement provides that he is an at-will employee
and his employment may be terminated at any time by us or
Mr. Guider. For a period of six months after his
termination of employment, Mr. Guider will be subject to
certain restrictions on competition with us and on the
solicitation of our employees, customers and clients.
Mr. Guiders employment agreement also entitles him to
an annual allowance of $1,000 for a medical physical
examination, to participate in our cash incentive program and to
participate in our general employee benefit plans in accordance
with the terms and conditions of such plans. The employment
agreement also provides Mr. Guider with certain severance
benefits. See Executive Compensation
Potential Payments upon Termination or
Change-in-Control
below.
Lawrence E. Aszmann. In August 2007, we
amended and restated our employment agreement with
Mr. Aszmann, our Chief Technology Officer.
Mr. Aszmanns employment agreement provides that he is
an at-will employee and his employment may be
terminated at any time by us or Mr. Aszmann. For a period
of six months after his termination of employment,
Mr. Aszmann will be subject to certain restrictions on
competition with us and on the solicitation of our employees,
customers and clients. Mr. Aszmanns employment
agreement also entitles him to an annual allowance of $1,000 for
a medical physical examination, to participate in our cash
incentive program and to participate in our general employee
benefit plans in accordance with the terms and conditions of
such plans. The employment agreement also provides
Mr. Aszmann with certain severance benefits. See
Executive Compensation Potential Payments
upon Termination or
Change-in-Control
below.
Dennis R. Johnson. In August 2007, we entered
into an employment agreement with Mr. Johnson, our
Executive Vice President, which was amended in February 2008
pursuant to a Letter Agreement. Mr. Johnsons
employment agreement provides that he is an at-will
employee and his employment may be terminated at any time by us
or Mr. Johnson. For a period of 12 months after his
termination of employment, Mr. Johnson will be subject to
certain restrictions on competition with us and on the
solicitation of our employees, customers and clients.
Mr. Johnsons employment agreement also provides that
Mr. Johnson is eligible to participate in Compellents
general employee benefit plans in accordance with the terms and
conditions of such plans. The employment agreement also provided
Mr. Johnson with certain severance benefits; however,
Compellent terminated Mr. Johnsons severance benefits
in February 2008 pursuant to the Letter Agreement. See
Executive Compensation Potential Payments
upon Termination or
Change-in-Control
below.
Potential
Payments Upon Termination or
Change-in-Control
Severance
Benefits
Philip E.
Soran, John P. Guider, Lawrence E. Aszmann
Compellents employment agreements with
Messrs. Aszmann, Guider and Soran provide that if we
terminate such Named Executive Officers employment without
cause, and other than as a result of death or disability, or
such Named Executive Officer resigns for good reason, the Named
Executive Officer is entitled to receive a lump sum payment
equal to six months of base salary and payments for six months
of continued health insurance coverage, subject to the Named
Executive Officers execution of a binding release of
claims. For purposes of these Named
27
Executive Officers employment agreements, any such Named
Executive Officer will be terminated automatically, and such
termination will be considered for cause, in the event:
|
|
|
|
|
he is convicted of a felony;
|
|
|
|
gross negligence or willful misconduct by any such Named
Executive Officer which is reasonably determined by our Board to
be injurious to our business or interests;
|
|
|
|
willful violation of specific and lawful directions of our Board
by any such Named Executive Officer persisting for a period of
five days after notice is given of such willful violation;
|
|
|
|
excessive absenteeism by any such Named Executive Officer
persisting for a period of 30 days after our Board has
given notice of such absenteeism; a material failure to perform
or observe the provisions of any such Named Executive
Officers employment agreement persisting for a period of
30 days after notice is given of such failure to perform or
observe; and
|
|
|
|
any act of fraud by any such Named Executive Officer with
respect to any aspect of our business where such act is
reasonably determined by our Board to be injurious to our
business.
|
For purposes of these Named Executive Officers employment
agreements, any such Named Executive Officer will be deemed to
have been terminated for good reason if following the occurrence
of any of the following events, the Named Executive Officer
provides written notice of the event within 30 days, we
fail to reasonably cure such event within 30 days
thereafter and the Named Executive Officers resignation is
effective not later than 30 days after such cure period:
|
|
|
|
|
a permanent material reduction or diminution in any such Named
Executive Officers job responsibilities or duties;
|
|
|
|
a material reduction in any such Named Executive Officers
base salary, provided that a general reduction of the base
salary of all executives shall not constitute good
reason; and
|
|
|
|
any such Named Executive Officers relocation on a
permanent basis to an office that is more than 75 miles
from the Minneapolis/St. Paul, Minnesota metropolitan area,
unless such relocation does not materially increase the Named
Executive Officers commute.
|
Upon termination of employment, each Named Executive Officer has
agreed not to compete with us for six months following such
termination under the terms and conditions of the respective
employment agreement.
Dennis R. Johnson. Mr. Johnsons
employment agreement with us, prior to entering into a letter
agreement in February 2008, provided that if we terminated his
employment agreement without cause, and other than as a result
of death or disability, or he resigned for good reason, he was
entitled to receive continued payment of his base salary then in
effect for 12 months following the date of such
termination, a pro rata payment for any earned but unpaid bonus
and payment for accrued vacation, subject to his execution of a
binding release of claims. The provisions of
Mr. Johnsons employment agreement, with respect to
termination without cause and resignation for good reason,
matched those of Messrs. Soran, Guider and Aszmann;
provided, however, that if Mr. Soran ceased to be
Compellents Chief Executive Officer and Mr. Johnson
terminated his employment within six months thereof, his
resignation would be considered for good reason. We mutually
terminated the severance arrangements under our employment
agreement with Mr. Johnson in February 2008 pursuant to a
letter agreement, when he informed us that he intended to retire
in June 2008. The other provisions of this agreement relating to
restrictions on competition and the solicitation of employees
remain in full force and effect. Certain of
Mr. Johnsons equity award agreements also provide
that in the event Mr. Johnson is terminated without cause,
the vesting of such equity awards will be accelerated such that
75% of the aggregate number of stock awards shall immediately
vest, if not previously vested in full. As of December 31,
2007, Mr. Johnson was vested as to at least 75% of the
shares subject to such equity awards.
Change-in-Control
We do not currently have individual agreements or arrangements
with any of our Named Executive Officers that provide for
additional or accelerated cash compensation upon a
change-in-control
of Compellent. Our Named Executive Officers may receive
accelerated vesting upon a
change-in-control
of Compellent with respect to equity awards under our 2002 Stock
Option Plan and our 2007 Equity Incentive Plan.
28
For equity awards under our 2002 Stock Option Plan, we have
entered into individual equity award agreements with each of our
Named Executive Officers that provide for the immediate vesting
of 75% of the aggregate number of shares subject to the equity
awards for the Named Executive Officers then providing service
for us, if not previously vested in full, upon a
change-in-control
of Compellent.
In the event of a corporate transaction or a
change-in-control,
outstanding stock awards under our 2007 Equity Incentive Plan
held by our employees, consultant or directors, including our
Named Executive Officers, may be assumed, continued, or
substituted by the surviving corporation. If the surviving
corporation does not assume, continue, or substitute such stock
awards, then under our 2007 Equity Incentive Plan (a) any
stock awards that are held by individuals performing services
for us immediately prior to the effective time of the
transaction, the vesting and exercisability provisions of such
stock awards will be accelerated in full and such stock awards
will be terminated if not exercised prior to the effective date
of the corporate transaction or
change-in-control,
and (b) all other outstanding stock awards will be
terminated if not exercised on or prior to the effective date of
the corporate transaction or
change-in-control.
As of December 31, 2007, none of our Named Executive
Officers held an equity award under our 2007 Equity Incentive
Plan.
Potential Payments Upon Termination or
Change-in-Control. The
following table illustrates the potential payments to our Named
Executive Officers in connection with their respective
termination without good cause or resignation for good reason,
and, with respect to Mr. Johnson, his resignation within
six months of a change in the Chief Executive Officer of
Compellent, and upon a
change-in-control,
as if such termination, resignation or
change-in-control
occurred as of December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payments in Connection With:
|
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
Termination
|
|
|
within
|
|
|
|
|
|
|
|
|
without Cause or
|
|
|
Six Months
|
|
|
Change
|
|
|
|
|
|
Resignation for
|
|
|
of CEO
|
|
|
in Control
|
|
Name
|
|
Type of Benefit
|
|
Good Reason ($)
|
|
|
Change ($)
|
|
|
($)(1)
|
|
|
Mr. Soran
|
|
Salary
|
|
$
|
145,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
Benefits
|
|
|
6,325
|
(3)
|
|
|
|
|
|
|
|
|
|
|
Equity Award Acceleration
|
|
|
|
|
|
|
|
|
|
$
|
568,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
151,325
|
|
|
|
|
|
|
|
568,093
|
|
Mr. Judd
|
|
Equity Award Acceleration
|
|
|
|
|
|
|
|
|
|
|
441,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
441,275
|
|
Mr. Guider
|
|
Salary
|
|
|
132,500
|
(2)
|
|
|
|
|
|
|
|
|
|
|
Benefits
|
|
|
1,870
|
(3)
|
|
|
|
|
|
|
|
|
|
|
Equity Award Acceleration
|
|
|
|
|
|
|
|
|
|
|
553,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
134,370
|
|
|
|
|
|
|
|
553,926
|
|
Mr. Aszmann
|
|
Salary
|
|
|
115,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
Benefits
|
|
|
6,325
|
(3)
|
|
|
|
|
|
|
|
|
|
|
Equity Award Acceleration
|
|
|
|
|
|
|
|
|
|
|
553,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
121,325
|
|
|
|
|
|
|
|
553,926
|
|
Mr. Johnson
|
|
Salary
|
|
|
200,000
|
(4)
|
|
$
|
200,000
|
(4)
|
|
|
|
|
|
|
Earned Bonus
|
|
|
96,000
|
(5)
|
|
|
96,000
|
(5)
|
|
|
|
|
|
|
Equity Award Acceleration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
296,000
|
|
|
|
296,000
|
|
|
|
|
|
|
|
|
(1)
|
|
The dollar values in this column
represent the amount of the benefit each of our Named Executive
Officers would have received from the acceleration of up to 75%
of the aggregate number of shares of such Named Executive
Officers outstanding equity awards under our 2002 Stock
Option Plan, as if such event occurred as of December 31,
2007. For outstanding stock options, the benefit amount of the
accelerated portion of such stock option award was calculated by
multiplying the accelerated portion of such stock option award
by the difference between the closing price of Compellent
|
29
|
|
|
|
|
common stock on December 31,
2007 ($12.03) as reported by NYSE Arca and the exercise price of
the option. For outstanding stock awards (or shares acquired
pursuant to the early exercise of a stock option award), the
benefit amount of the accelerated portion of such stock award
was calculated by multiplying the accelerated portion of the
stock award by the closing price of Compellent common stock on
December 31, 2007 ($12.03) as reported by NYSE Arca.
|
|
(2)
|
|
Represents six months of base
salary.
|
|
(3)
|
|
Represents six months of healthcare
benefits.
|
|
(4)
|
|
Represents 12 months of base
salary.
|
|
(5)
|
|
Represents earned but unpaid bonus.
|
Compensation
Committee Report
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis, or
CD&A, contained in this proxy statement. Based on this
review and discussion, the Compensation Committee has
recommended to the Board that the CD&A be included in this
proxy statement and incorporated into our Annual Report on
Form 10-K
for the year ended December 31,
2007.
Mr. Charles Beeler (Chair)
Mr. R. David Spreng
Mr. Sven A. Wehrwein
The material in this report is not soliciting
material, is furnished to, but not deemed
filed with, the Commission and is not deemed to be
incorporated by reference in any of our filings under the
Securities Act or the Exchange Act, other than our Annual Report
on
Form 10-K,
where it shall be deemed to be furnished, whether
made before or after the date hereof and irrespective of any
general incorporation language in any such filing, expect to the
extent specifically incorporated by referenced therein.
Equity
Compensation Plan Information
The following table provides certain information with respect to
all of our equity compensation plans in effect as of
December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
Number of Securities
|
|
|
|
|
|
Remaining Available for
|
|
|
|
to be Issued Upon
|
|
|
Weighted Average
|
|
|
Issuance Under Equity
|
|
|
|
Exercise of
|
|
|
Exercise-Price of
|
|
|
Compensation Plans
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
(Excluding Securities
|
|
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Reflected in Column (a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
1,217,424
|
|
|
$
|
3.16
|
(1)
|
|
|
5,137,700
|
(2)
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,217,424
|
|
|
$
|
3.16
|
(1)
|
|
|
5,137,700
|
(2)
|
|
|
|
(1)
|
|
Represents the weighted average
exercise price of outstanding stock options only.
|
|
(2)
|
|
Of these shares,
1,000,000 shares remained available for the grant of future
rights under our 2007 Employee Stock Purchase Plan as of
December 31, 2007. Under our 2007 Employee Stock Purchase
Plan, participants are permitted to purchase our common stock at
a discount on certain dates through payroll deductions within a
pre-determined purchase period. Accordingly, these numbers are
not determinable.
|
30
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of our common stock as of
April 1, 2008 by:
|
|
|
|
|
each director and nominee for director;
|
|
|
|
each of our Named Executive Officers;
|
|
|
|
all of our executive officers and directors of Compellent as a
group; and
|
|
|
|
all those known by us to be beneficial owners of more than 5% of
our common stock.
|
Unless otherwise indicated, the address for each of the
beneficial owners in the table below is
c/o Compellent
Technologies, Inc., 7625 Smetana Lane, Eden Prairie, Minnesota,
55344.
|
|
|
|
|
|
|
|
|
|
|
Beneficial Ownership(1)
|
|
Beneficial Owner
|
|
Number of Shares
|
|
|
Percent of Total
|
|
|
5% Stockholders
|
|
|
|
|
|
|
|
|
Entities Affiliated with El Dorado Ventures(2)
|
|
|
5,064,613
|
|
|
|
16.6
|
%
|
Entities Affiliated with Crescendo Ventures(3)
|
|
|
5,064,611
|
|
|
|
16.6
|
|
Cargill Incorporated(4)
|
|
|
2,590,413
|
|
|
|
8.5
|
|
Entities Affiliated with Centennial Ventures(5)
|
|
|
2,440,393
|
|
|
|
8.0
|
|
Affinity Ventures III, L.P.(6)
|
|
|
1,566,503
|
|
|
|
5.1
|
|
Directors and Named Executive Officers
|
|
|
|
|
|
|
|
|
Charles Beeler(7)
|
|
|
5,069,634
|
|
|
|
16.6
|
|
Neel Sarkar(8)
|
|
|
2,445,414
|
|
|
|
8.0
|
|
David Spreng(9)
|
|
|
5,069,632
|
|
|
|
16.6
|
|
Sven A. Wehrwein(10)
|
|
|
11,021
|
|
|
|
|
*
|
Lawrence E. Aszmann(11)
|
|
|
1,337,702
|
|
|
|
4.4
|
|
John P. Guider(12)
|
|
|
1,338,455
|
|
|
|
4.4
|
|
Dennis R. Johnson(13)
|
|
|
168,422
|
|
|
|
|
*
|
John R. Judd(14)
|
|
|
114,896
|
|
|
|
|
*
|
Philip E. Soran(15)
|
|
|
1,328,772
|
|
|
|
4.3
|
|
|
|
|
|
|
|
|
|
|
All executive officers and directors as a group
(10 persons)(16)
|
|
|
17,030,371
|
|
|
|
54.9
|
%
|
|
|
|
*
|
|
Less than one percent.
|
|
(1)
|
|
This table is based upon
information supplied by executive officers, directors and
principal stockholders and Schedules 13G filed with the SEC.
Unless otherwise indicated in the footnotes to this table and
subject to community property laws where applicable, we believe
that each of the stockholders named in this table has sole
voting and investment power with respect to the shares indicated
as beneficially owned. Applicable percentages are based on
30,604,450 shares outstanding on April 1, 2008,
adjusted as required by rules promulgated by the SEC. Includes
shares of common stock subject to a right of repurchase within
60 days of April 1, 2008 and shares issuable pursuant
to stock options exercisable within 60 days of
April 1, 2008.
|
|
(2)
|
|
Consists of 4,914,716 shares
held by El Dorado Ventures VI, L.P. and 149,897 shares held
by El Dorado Technology 01, L.P. Mr. Beeler, a member
of our Board, is a General Partner of El Dorado Ventures, the
sponsor of these entities and is deemed to have shared voting
and investment power of the shares held by El Dorado Ventures
and its affiliated entities; however, Mr. Beeler disclaims
beneficial ownership of these shares except to the extent of his
pecuniary interest therein. The address of El Dorado Ventures is
2440 Sand Hill Road, Suite 200, Menlo Park, CA 94025.
|
|
(3)
|
|
Consists of 4,601,422 shares
held by Crescendo Ventures IV, L.P., 276,901 shares held by
Crescendo IV AG & Co. Beteiligungs KG,
128,728 shares held by Crescendo IV Entrepreneurs
Fund, L.P. and 57,560 shares held by Crescendo IV
Entrepreneurs Fund A, L.P. Mr. Spreng, a member of our
Board, is a Managing General Partner of Crescendo Ventures, the
sponsor of these entities and is deemed to have shared voting
and investment power of the shares held by Crescendo
|
31
|
|
|
|
|
Ventures and its affiliated
entities; however, Mr. Spreng disclaims beneficial
ownership of these shares except to the extent of his pecuniary
interest therein. The address of Crescendo Ventures is 480
Cowper Street, Suite 300, Palo Alto, CA 94301.
|
|
(4)
|
|
The address of Cargill Incorporated
is 15407 McGinty Road West, Wayzata, Minnesota 55391.
|
|
(5)
|
|
Consists of 2,405,514 shares
held by Centennial Ventures VII, L.P. and 34,879 shares
held by Centennial Entrepreneurs Fund VII, L.P. Centennial
Holding VII, LLC is the general partner of these entities.
Mr. Sarkar, a member of our Board, is a Managing Director
of Centennial Ventures, an affiliate of Centennial Holding VII,
LLC and is deemed to have shared voting and investment power of
the shares held by Centennial Ventures and its affiliated
entities; however, Mr. Sarkar disclaims beneficial
ownership of these shares except to the extent of his pecuniary
interest therein. The address of Centennial Ventures is 1428
Fifteenth Street, Denver, CO 80202.
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(6)
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The address of Affinity Ventures
III, L.P. is 901 Marquette Avenue Suite 1810, Minneapolis,
Minnesota 55424.
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(7)
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Consists of (a) the shares
described in Note (2) above, which Mr. Beeler
disclaims beneficial ownership of these shares, except to the
extent of his pecuniary interest therein and (b) stock
options for 5,021 shares of our common stock exercisable
within 60 days of April 1, 2008.
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(8)
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Consists of (a) the shares
described in Note (5) above, which Mr. Sarkar
disclaims beneficial ownership of these shares, except to the
extent of his pecuniary interest therein and (b) stock
options for 5,021 shares of our common stock exercisable
within 60 days of April 1, 2008.
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(9)
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Consists of (a) the shares
described in Note (3) above, which Mr. Spreng
disclaims beneficial ownership of these shares, except to the
extent of his pecuniary interest therein and (b) stock
options for 5,021 shares of our common stock exercisable
within 60 days of April 1, 2008.
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(10)
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Includes stock options for
5,021 shares of our common stock exercisable within
60 days of April 1, 2008.
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(11)
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Includes stock options for
137,702 shares of our common stock exercisable within
60 days of April 1, 2008.
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(12)
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Consists of
(a) 600,000 shares of common stock held by
Mr. Guider, (b) 600,000 shares held by the Guider
2007 Grantor Retained Annuity Trust, of which Mr. Guider is
trustee, and (c) stock options for 138,455 shares of
our common stock exercisable within 60 days of
April 1, 2008.
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(13)
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Includes stock options for
422 shares of common stock exercisable within 60 days
of April 1, 2008.
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(14)
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Includes stock options for
24,896 shares of common stock exercisable within
60 days of April 1, 2008 and 46,877 shares of
common stock subject to our right of repurchase in the event
Mr. Judds employment with us terminates 60 days
from April 1, 2008.
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(15)
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Consists of
(a) 706,533 shares of common stock held by
Mr. Soran, of which 66,669 shares are subject to our
right of repurchase in the event Mr. Sorans
employment with us terminates 60 days from April 1,
2008, (b) 480,000 shares of common stock held by the
Soran 2007 Grantor Retained Annuity Trust of which
Mr. Soran is trustee, (c) 123,200 shares of
common stock held by Mr. Sorans immediate family
members over which Mr. Soran is deemed to have beneficial
ownership, (d) 10,000 shares of common stock held by
The Alysa M. Soran 2007 Irrevocable Trust, of which
Mr. Soran is trustee and (e) options to purchase
9,039 shares of common stock exercisable within
60 days of April 1, 2008.
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(16)
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Includes 12,569,617 shares
held by entities affiliated with certain of our directors and
4,434,670 shares beneficially owned by our executive
officers, of which (a) stock options for
388,785 shares of common stock are exercisable within
60 days of April 1, 2008, and
(b) 137,505 shares of which are subject to our right
of repurchase in the event such executive officers
employment with us terminates 60 days from April 1,
2008.
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CERTAIN
TRANSACTIONS WITH RELATED PERSONS
Related-Person
Transactions Policy and Procedures
Pursuant to Compellents Code of Business Conduct and
Ethics, our executive officers, directors, and principal
stockholders, including their immediate family members and
affiliates, are not permitted to enter into a related party
transaction with us without the prior consent of our Audit
Committee, or other independent committee of our Board in the
case it is inappropriate for our Audit Committee to review such
transaction due to a conflict of interest. Any request for us to
enter into a transaction with an executive officer, director,
principal stockholder, or any of such persons immediate
family members or affiliates, in which the amount involved
exceeds $120,000 must first be presented to our Audit Committee
for review, consideration and approval. All of our directors,
executive officers and employees are required to report to our
Audit Committee any such related party transaction. In approving
or rejecting the proposed transaction, our Audit Committee shall
consider the relevant facts and circumstances available and
deemed relevant to the Audit Committee, including, but not
limited to the risks, costs and benefits to
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us, the terms of the transaction, the availability of other
sources for comparable services or products, and, if applicable,
the impact on a directors independence. Our Audit
Committee will approve only those agreements that, in light of
known circumstances, are in, or are not inconsistent with, our
best interests, as our Audit Committee determines in the good
faith exercise of its discretion. All of the transactions
described below were entered into prior to the adoption of our
Code of Business Conduct and Ethics and were approved by our
Board.
Certain
Related-Person Transactions
Third
Amended and Restated Investor Rights Agreement
Compellent and the prior holders of our preferred stock,
including entities with which certain of our directors are
affiliated, have entered into an investor rights agreement
pursuant to which these stockholders are entitled to certain
rights with respect to the registration of their shares. As of
December 31, 2007, the holders of 18,939,164 shares of
our common stock were entitled to such rights.
Stock
Repurchases, Stock Option Grants and Bonuses
In March 2007, we repurchased from John R. Judd, our Chief
Financial Officer, an aggregate of 90,000 shares of
unvested common stock at $1.25 per share for an aggregate
consideration of $112,500, which was held by Mr. Judd
pursuant to the early exercise of a stock option. On
March 28, 2007, we issued to Mr. Judd a stock option
to purchase an aggregate of 90,000 shares of unvested stock
with an exercise price of $1.25 per share. We also paid a bonus
to Mr. Judd of an aggregate of $17,100 for the tax
liability incurred by him with respect to holding exercised
stock from July 2006 to March 2007.
In April 2007, we repurchased from Dennis R. Johnson, our
Executive Vice President, an aggregate of 20,000 shares of
unvested common stock at $1.25 per share for an aggregate
consideration of $25,000, which was held by Mr. Johnson
pursuant to the early exercise of a stock option. On
March 28, 2007, we issued to Mr. Johnson a stock
option to purchase an aggregate of 20,000 shares of common
stock with an exercise price of $1.25 per share. We also paid a
bonus to Mr. Johnson of an aggregate of $3,800 for the tax
liability incurred by him with respect to holding exercised
stock from April 2006 to March 2007.
Employment
Agreements
We have entered into employment agreements with our certain of
our executive officers. See Executive
Compensation Employment Agreements.
Stock
Option and Stock Award Grants to Executive Officers and
Directors
We have granted stock options to our executive officers and our
non-employee directors and a stock award to one current member
of our Board. See Executive Compensation and
Information Regarding Our Board of Directors and
Corporate
Governance-Director
Compensation.
Indemnification
Agreements with Executive Officers and Directors
We have entered into an indemnification agreement with each of
our directors and executive officers. These indemnification
agreements and our certificate of incorporation and our bylaws
indemnify each of our directors and officers to the fullest
extent permitted by Delaware General Corporation Law.
HOUSEHOLDING
OF PROXY MATERIALS
The SEC has adopted rules that permit companies and
intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements and annual reports with
respect to two or more stockholders sharing the same address by
delivering a single proxy statement addressed to those
stockholders. This process, which is commonly referred to as
householding, potentially means extra convenience
stockholders and cost savings for companies.
This year, a number of brokers with account holders who are
Compellent stockholders will be householding our
proxy materials. A single proxy statement will be delivered to
multiple stockholders sharing an address unless
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contrary instructions have been received from the affected
stockholders. Once you have received notice from your broker
that they will be householding communications to
your address, householding will continue until you
are notified otherwise or until you revoke your consent. If, at
any time, you no longer wish to participate in
householding and would prefer to receive a separate
proxy statement and annual report, please notify your broker.
Direct your written request to Compellent Technologies, Inc.,
Corporate Secretary,
7625 Smetana Lane, Eden Prairie, Minnesota 55344 or
contact the Corporate Secretary at
(877)
715-3300.
Stockholders who currently receive multiple copies of the proxy
statement at their addresses and would like to request
householding of their communications should contact
their brokers.
OTHER
MATTERS
Our Board knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are
properly brought before the Annual Meeting, it is the intention
of the persons named in the accompanying proxy to vote on such
matters in accordance with their best judgment.
By Order of the Board of Directors
Lawrence E. Aszmann
Secretary
April 22, 2008
A copy of our Annual
Report on
Form 10-K
for the year ended December 31, 2007, as filed with the
SEC, is being furnished to stockholders concurrently herewith. A
stockholder may submit a written request for an additional copy
of the Annual Report on
Form 10-K
for the year ended December 31, 2007 to: Secretary,
Compellent Technologies, Inc., 7625 Smetana Lane, Eden Prairie,
Minnesota 55344.
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COMPELLENT TECHNOLOGIES, INC.
7625 SMETANA LANE
EDEN PRAIRIE, MN 55344
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VOTE BY INTERNET -
www.proxyvote.comUse the Internet to transmit your voting instructions and for electronic delivery
of information up until 11:59 P.M. Eastern Time on May 19, 2008. 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 - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time on May 19, 2008. Have your proxy card in hand
when you call and then follow the instructions. VOTE BY MAILMark, sign and date your proxy card and promptly return it in the postagepaid
envelope we have provided or return it to Compellent Technologies, Inc.,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER
COMMUNICATIONS If you would like to reduce the costs incurred by Compellent Technologies,
Inc. in mailing proxy materials, you can consent to receiving all future proxy
statements, proxy cards and annual reports electronically via e-mail or the
Internet. To sign up for electronic delivery, please follow the instructions
above to vote using the Internet and, when prompted, indicate that you
agree to receive or access stockholder communications electronically in
future years.
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TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK AS FOLLOWS: |
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH
AND RETURN THIS PORTION
ONLY |
THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED.
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COMPELLENT TECHNOLOGIES, INC.
2008 ANNUAL MEETING PROXY CARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE NOMINEES FOR DIRECTOR LISTED BELOW AND A
VOTE "FOR" PROPOSAL 2.
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For All
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Withhold All
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For All Except
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To withhold authority to vote
for any individual nominee(s), mark For All Except
and write the number(s) of the nominee(s)s
on the line below.
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1.
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To elect two directors to hold office until the 2011
Annual Meeting of Stockholders
Nominees: 01) Philip E. Soran 02) Sven A. Wehrwein |
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For |
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Abstain |
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To ratify the selection of Grant Thornton LLP as Compellents independent registered public accounting firm for the year ending
December 31, 2008, as described in the accompanying proxy statement.
OTHER MATTERS: The Board of Directors knows of no other matters that will be presented for consideration at the 2008 Annual
Meeting. If any other matters are properly brought before the 2008 Annual Meeting, it is the intention of the persons named in the proxy
card to vote on such matters in accordance with their best judgment. |
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The shares represented by this proxy when properly executed will be voted in the manner directed herein by the undersigned Stockholder(s).
If no direction is made, this proxy will be voted FOR all the nominees listed in Proposal 1 and Proposal 2. If any other matters
properly come before the meeting, the person named in this proxy will vote in their discretion.
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For address changes and/or comments, please check this box
and write them on the back where indicated. |
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Yes |
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No |
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Please indicate if you plan to attend the 2008 Annual Meeting. |
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(NOTE: Please sign exactly as your name(s) appear(s) hereon. All holders must
sign. When signing as attorney, executor, administrator, or other fiduciary, please
give full title as such. Joint owners should each sign personally. If a corporation,
please sign in full corporate name, by authorized officer. If a partnership, please
sign in partnership name by authorized person.)
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Signature [PLEASE SIGN WITHIN
BOX] |
Date |
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Signature (Joint Owners) |
Date |
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COMPELLENT TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
2008 ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 2008
The stockholder(s) hereby appoint(s) Philip E. Soran and John R. Judd, or either of them, as proxies and as attorneys-in-fact, each with the full power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of Compellent Technologies, Inc. that the stockholder(s) is/are entitled to vote at the 2008 Annual Meeting of Stockholders to be held at 3:30 p.m., Central Time on May 20, 2008, at
Faegre & Benson, LLP, 2200 Wells Fargo Center, 90 South 7th Street, Minneapolis, MN 55402, and any and all postponements, continuations and adjournments thereof with all powers that the undersigned would possess if personally present, upon and in respect of the following matters and in accordance with the following instructions, with discretionary authority as to any and all other matters that may properly come before the 2008 Annual Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR PROPOSAL 2.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE