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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 (Amendment No.          )

 

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March 25, 2010                

Dear Stockholder,

        I am pleased to invite you to attend the 2010 Annual Meeting of Stockholders of Avid Technology, Inc. The annual meeting will be held on Tuesday, May 4, 2010 at 8:00 a.m. EDT, at 776 Boylston Street, Boston, Massachusetts.

        You will find information regarding the business to be conducted at the annual meeting in our notice of annual meeting and proxy statement. We make our proxy materials, including our annual report to stockholders, available over the Internet. Most stockholders will receive a notice of the Internet availability of the proxy materials instead of a printed copy. The notice of Internet availability includes instructions for accessing the proxy materials over the Internet or requesting a printed copy of the proxy materials by mail or an electronic copy by email.

        Beginning this year, your vote is especially important because of a recent regulatory change. If your shares are held by a broker, your broker cannot vote your shares for the election of directors unless you provide voting instructions. In 2009, the U.S. Securities and Exchange Commission approved an amendment to the New York Stock Exchange rules that eliminated broker discretionary voting for the election of directors. This means that your broker no longer has the discretion to vote shares held on your behalf with respect to the election of directors. Therefore, if your shares are held by a broker, please instruct your broker regarding how to vote your shares on the election of directors. This will ensure that your shares are counted with respect to the election of directors.

        Your vote is important regardless of the number of shares that you own. Whether or not you plan to attend the annual meeting, we hope that you will submit your vote by proxy as soon as possible. If you received a notice of Internet availability, you may submit your vote by proxy over the Internet. Alternatively, if you received a printed copy of the proxy materials (including a proxy card) you may submit your proxy vote by mail. Voting by proxy will not affect your right to attend the annual meeting and vote in person should you so choose.

        On behalf of the board of directors, I would like to express our appreciation for your interest in our company. I look forward to greeting many of you at the annual meeting.

Sincerely,




Gary G. Greenfield
Chairman and Chief Executive Officer

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AVID TECHNOLOGY, INC.

One Park West
Tewksbury, MA 01876

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NOTICE OF 2010 ANNUAL MEETING OF STOCKHOLDERS

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AVID TECHNOLOGY, INC.

One Park West
Tewksbury, Massachusetts 01876

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PROXY STATEMENT

        

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INFORMATION ABOUT PROXY MATERIALS, THE ANNUAL MEETING AND VOTING

Why am I receiving these materials?

        We have made these materials available to you on the Internet or, upon your request, have delivered printed versions of these materials to you by mail, in connection with the solicitation of proxies by our board of directors for use at our 2010 Annual Meeting of Stockholders to be held on Tuesday, May 4, 2010 at 8:00 a.m., EDT, and at any postponement(s) or adjournment(s) of the annual meeting. The annual meeting will be held at 776 Boylston Street, Boston, Massachusetts.

What is included in these materials?

        These materials include:

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this proxy statement (including the Notice of 2010 Annual Meeting of Stockholders); and



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our 2009 Annual Report to Stockholders for the year ended December 31, 2009.

        If you requested a printed version of these materials by mail, these materials also include a proxy card.

What items will be voted on at the Annual Meeting?

        Stockholders will vote on the following two items at the annual meeting:

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the election to the board of directors of the three nominees named in this proxy statement (Proposal No. 1); and



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ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2010 (Proposal No. 2).

        We are not aware of any other matters to be presented at our annual meeting. However, if any other matters are properly presented, the persons designated as proxies intend to vote, or otherwise act, on those matters in accordance with their judgment.

What are the board of directors' voting recommendations?

        The board recommends that you vote your shares:

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"FOR" each of the three nominees to the board of directors (Proposal No. 1); and



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"FOR" ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2010 (Proposal No. 2).

Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?

        Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a notice of Internet availability of proxy materials, the notice, to our stockholders. All stockholders have the ability to access the proxy materials on the website referred to in the notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed or electronic copy may be found in the notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.

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I share an address with another stockholder and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?

        Some brokers or custodians practice "householding" whereby they provide a single copy of proxy materials to multiple stockholders sharing the same household. If you have received proxy materials on a household basis, we will deliver an additional copy of the proxy materials at no charge upon request to: Avid, One Park West, Tewksbury, Massachusetts 01876, Attn: Investor Relations, telephone: (978) 640-3346. If you are receiving proxy materials on a household basis and wish to discontinue doing so, or if you would like to begin receiving proxy materials on a household basis, you should contact your bank or custodian, or you may contact us as described above.

How can I get electronic access to the proxy materials?

        Our proxy materials are available over the Internet. Most of our stockholders will receive a notice of the Internet availability of our proxy materials in lieu of a printed copy of such proxy materials. The notice of Internet availability includes instructions for accessing the proxy materials over the Internet or requesting a printed copy of the proxy materials by mail or an electronic copy by email. It also includes instructions on how stockholders may elect to receive future proxy materials in printed form by mail or electronically by email.

Who may vote at the Annual Meeting?

        Only stockholders of record as of the close of business on March 10, 2010, the record date, are entitled to receive notice of, to attend and to vote at the annual meeting. As of the record date, there were 37,658,819 shares of our common stock, $0.01 par value per share, issued and outstanding. Stockholders are entitled to one vote per share.

What is the difference between a stockholder of record and a beneficial owner of shares held in street name?

        In certain sections of this proxy statement, we distinguish between stockholders of record and beneficial owners. Most of our stockholders are beneficial owners of shares held in street name.

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Stockholders of Record.  If your shares are held in your name with our transfer agent, Computershare Investor Services, you are considered the "stockholder of record" of those shares. As a stockholder of record, you will receive the notice of Internet availability or, as applicable, a printed or electronic copy of the proxy materials directly from us.



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Beneficial Owners of Shares Held in Street Name.  If your shares are held in a brokerage account or by another custodian, you are considered the "beneficial owner" of those shares and the shares are held in "street name" by the broker or custodian, which is the stockholder of record. As a beneficial owner, your broker or custodian will forward to you the notice of Internet availability or, as applicable, a printed or electronic copy of the proxy materials.

How do I vote?

        There are three ways to vote your shares:

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Over the Internet.  If you receive a notice of Internet availability, or if you receive a printed copy of the proxy materials by regular or electronic mail (including a proxy card), you may submit your vote over the Internet any time prior to 11:59 p.m., EDT, on May 3, 2010 by following the instructions on the notice or proxy card.



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By Mail.  If you receive a printed copy of the proxy materials (including a proxy card) by mail, you may submit your vote by mail by following the instructions on the proxy card. Please allow sufficient time for mailing as only proxy cards received by us prior to the annual meeting will be deemed valid and counted.



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In Person.  All stockholders of record may vote in person at the annual meeting. We will give you a ballot when you arrive. Please note, however, that if you are a beneficial owner of shares held in

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street name, in order to vote your shares in person at the annual meeting, you must obtain a legal proxy from the stockholder of record (which is your broker or custodian) that authorizes you to do so.

        If you receive more than one notice of Internet availability or multiple printed copies of the proxy materials (including multiple proxy cards), in order to vote all of your shares by proxy, you must separately vote over the Internet the shares represented by each notice or complete and return each proxy card. You may receive multiple copies of the notice or proxy materials if, for example, you hold shares in more than one brokerage account or you are a stockholder of record and hold shares registered in more than one name.

What is the quorum requirement for the Annual Meeting?

        The holders of a majority of the shares of our issued and outstanding common stock entitled to vote at the annual meeting constitute a quorum. Shares of common stock represented in person or by proxy (including shares that abstain or do not vote for any reason with respect to one or more of the proposals presented for stockholder approval) will be counted for purposes of determining whether a quorum is present at the annual meeting. If a quorum is not present, the annual meeting will be adjourned until a quorum is obtained.

How are proxies voted?

        All shares represented by valid proxies received prior to the annual meeting will be voted and, where a stockholder specifies a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the stockholder's instructions, which may include FOR, AGAINST and ABSTAIN for all proposals.

What happens if I do not return my proxy?

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Stockholders of Record.  If you are a stockholder of record and you do not vote over the Internet, by mailing your proxy card or by ballot at the annual meeting, your shares will not be voted.



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Beneficial Owners of Shares Held in Street Name.  If you are a beneficial owner of shares held in street name and do not vote over the Internet, by mailing your proxy card or by proxy at the annual meeting, under the rules of various securities exchanges, the broker or custodian that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If your broker or custodian that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the broker or custodian will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares; this is referred to as a "broker non-vote." A broker non-vote may also result if your broker or custodian may, but opts not to, vote your shares on a routine matter for which you have not given instruction.

What happens if I submit my vote by proxy but do not give specific voting instructions with respect to a particular proposal?

        If you sign and return a proxy card without giving specific voting instructions with respect to a particular proposal, the persons designated by us as proxies will vote your shares as recommended by our board of directors.

Which ballot measures are considered "routine" or "non-routine"?

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Election of Directors (Proposal No. 1).  The election of directors is considered a non-routine matter under applicable rules.



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Ratification of the appointment of Ernst & Young LLP (Proposal No. 2).  The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2010 is considered a routine matter under applicable rules.

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What is the voting requirement to approve each of the proposals?

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Election of Directors (Proposal No. 1).  To be elected, directors must receive a majority of the votes cast (the number of shares voted "for" a director nominee must exceed the number of votes cast "against" that nominee). Prior to the election, each director nominee delivered to the board of directors an irrevocable resignation that will become effective if (i) he does not receive a majority of the votes cast (with "abstentions" and "broker non-votes" not counted as a vote "for" or "against" such nominee's election) and (ii) within 90 days following certification of the stockholder vote the board determines to accept such resignation in accordance with our corporate governance guidelines. We will publicly disclose any such decision by the board of directors with regard to any director's resignation.



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Ratification of the appointment of Ernst & Young LLP (Proposal No. 2).  Ratification of the selection of Ernst &Young LLP as our independent registered public accounting firm for 2010 requires the affirmative vote of a majority of the votes cast (the number of shares voted "for" the proposal must exceed the number of votes cast "against" the proposal).

How are abstentions and broker non-votes treated?

        Abstentions and broker non-votes will not count as votes FOR or AGAINST any proposal or as votes cast or shares voting on any proposal. Assuming the presence of a quorum, abstentions and broker non-votes will not affect the voting on any of the proposals under consideration by stockholders. Abstentions and broker non-votes will, however, as stated above, be counted as present and entitled to vote for purposes of determining whether a quorum is present at the annual meeting.

Can I change my vote after I have voted?

        If you vote your shares by proxy, you may revoke your proxy at any time before its exercise by re-voting over the Internet, submitting a subsequently dated proxy card, delivering a written revocation to our Corporate Secretary, or voting in person at the annual meeting. If you submit multiple proxies, the last proxy received by us will be the proxy used for purposes of the annual meeting. Voting by proxy will not affect your right to attend the annual meeting and vote in person should you so choose.

Who will serve as the inspector of election?

        Our Director of Investor Relations will serve as the inspector of election.

Where can I find the voting results of the Annual Meeting?

        The preliminary voting results will be announced at the annual meeting. The final voting results will be tallied by the inspector of election and published in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, which the Company is required to file with the SEC by May 10, 2010.

Who is paying for the cost of this proxy solicitation?

        We will bear all costs for this solicitation of proxies. Our directors, officers and employees may solicit proxies by mail, telephone, email, facsimile or personally without additional compensation. We are requesting that brokers and custodians forward the notice of Internet availability or, as applicable, printed copies of the proxy materials to stockholders for whom they hold shares. We will reimburse these entities for their reasonable out-of-pocket distribution expenses.

What is the deadline to propose actions for consideration at the 2011 Annual Meeting of Stockholders?

        Our stockholders may submit proposals on matters appropriate for stockholder action at meetings of our stockholders in accordance with Rule 14a-8 promulgated under the Exchange Act. A proposal that a stockholder would like included in our proxy statement for our 2011 Annual Meeting of Stockholders must satisfy all applicable requirements of Rule 14a-8 and must be received by our Secretary at our principal offices in Massachusetts no later than November 25, 2010.

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        If a stockholder intends to present a proposal at our 2011 annual meeting, but not include that proposal in our proxy statement, the proposal must be submitted to our Secretary at our principal offices in Massachusetts no later than February 23, 2011, or 60 days before the date of our 2011 annual meeting, whichever is later. We have not yet set a date for our 2011 annual meeting; however, if our 2011 annual meeting is held on May 4, 2011 (the anniversary of our 2010 annual meeting), the deadline for delivery of a proposal would be March 5, 2011.

DIRECTORS

        Set forth below is information regarding each nominee and each continuing director, including information about the specific experience, qualifications, attributes or skills that led the board of directors to conclude that he or she should serve as a director of Avid at the time we file this proxy statement. There are no family relationships among any of our directors and executive officers.

Nominees

Class II Directors (Terms to expire at our 2010 annual meeting)

        Robert M. Bakish, 46, became a director in October 2009. Mr. Bakish has served as the President of MTV Networks International since January 2007. Mr. Bakish is also Chairman of the Board of Viacom 18 (MTV's Indian joint venture) and serves on the boards of MTV's joint ventures with BSkyB and Telecom Italia Media. From 2004 to 2007, Mr. Bakish was Executive Vice President, Operations, of Viacom Enterprises and was responsible for strategic planning and business development, the Viacom Plus Sales Group, IS&T and the Famous Music publishing company. Prior to that, he served as MTV Networks' Executive Vice President and Chief Operating Officer, Advertising Sales and from 2003 to 2005 was Chairman of the Cable Television Advertising Bureau. Previously, Mr. Bakish was also a partner with Booz Allen & Hamilton in its Media and Entertainment practice. The nomination of Mr. Bakish was based on the unique insights he provides to the board relative to the challenges, opportunities and operations of the broadcast industry, as well as his expertise in strategic planning and business development.

        Gary G. Greenfield, 55, our Chairman, President and Chief Executive Officer, joined Avid in December 2007. From 2003 to 2007, Mr. Greenfield served as Chief Executive Officer of GXS, Inc., a provider of business-to-business integration, synchronization and collaboration solutions. During the same period, he also served as an Operating Partner with Francisco Partners, a technology-focused private equity firm. From 2002 to 2003, Mr. Greenfield served as Chief Executive Officer of Peregrine Systems, Inc., an infrastructure management software company, and prior to that, as President and Chief Executive Officer of Merant PLC, a provider of software solutions for enterprise change management. Mr. Greenfield also serves as a director of Novell, Inc. and Vocus, Inc. The nomination of Mr. Greenfield was based on his demonstrated leadership, business skill and operational experience as well as the effective leadership he has demonstrated as our Chairman and Chief Executive Officer, particularly in connection with the transformation strategy he has implemented in our business.

        Louis Hernandez, Jr., 43, became a director in February 2008. Mr. Hernandez is Chairman and Chief Executive Officer of Open Solutions Inc., a provider of enterprise-wide enabling technologies for the financial services marketplace, positions he has held since 2000 and 1999, respectively. Previously, Mr. Hernandez served as Executive Vice President and Chief Financial Officer of RoweCom Inc., an electronic commerce software vendor. Prior to joining RoweCom, Mr. Hernandez served as the Chief Financial Officer and Corporate Secretary for U.S. Medical Instruments, Inc. and worked in the business and advisory services group of Price Waterhouse LLP. Mr. Hernandez also serves as a director of Unica Corporation, HSBC North America Holdings Inc., HSBC USA Inc. and HSBC Bank USA, N.A. The nomination of Mr. Hernandez was based on the valuable perspective he brings to the board of directors as a Chief Executive Officer of a technology company. He is also widely recognized as a leader and innovator in the technology industry.

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Continuing Directors

Class III Directors (Terms to expire at our 2011 annual meeting)

        Elizabeth M. Daley, 67, became a director in February 2005. Dr. Daley has been Dean of the School of Cinematic Arts at the University of Southern California since 1991. Dr. Daley brings an excellent perspective on our business through the experience she has with our customer base, including insights into industry trends gleaned in her capacity as the dean of a major U.S. film school.

        Youngme E. Moon, 45, became a director in September 2005. Dr. Moon has been a professor at Harvard Business School since 1998. Prior to that, Dr. Moon was a professor at the Massachusetts Institute of Technology. Dr. Moon also serves on the Board of Governors of the American Red Cross. Dr. Moon's expertise in innovative consumer and other marketing strategies, in addition to her other business insights, adds significant value to board discussions.

        David B. Mullen, 59, became a director in July 2009. Mr. Mullen is currently an independent consultant. From 2002 until January 2010, he was Executive Vice President and Chief Financial Officer of NAVTEQ (formerly Navigation Technologies), a provider of digital map data for in-vehicle, portable, wireless and enterprise solutions. Mr. Mullen currently serves as a director of eLoyalty Corporation. Our board of directors values Mr. Mullen's extensive financial expertise and experience as a chief financial officer of four public companies, as well as his accomplished history of working with global, public companies in the technology industry.

Class I Directors (Terms to expire at our 2012 annual meeting)

        George H. Billings, 59, became a director in March 2004. Mr. Billings has been the President of Billings & Co., a management consulting firm focused on the wireless communications and related industries, since 1987. Mr. Billings has also served as Chief Operating Officer and Chief Executive Officer of Silicon Wireless, Ltd.; Chief Operating Officer and Vice Chairman of Radio Movil Digital Americas, Inc.; General Manager of the Washington-Baltimore Cellular Telephone Company Partnership (d/b/a Cellular One); and Vice President of Corporate Development of the Communications Satellite Corporation. Mr. Billings contributes diversified skills to our board through his extensive financial, management and operational experience. He has also made extensive contributions as a director and chair of the audit committee, including through his collaboration with our independent auditors and senior management team.

        Nancy Hawthorne, 58, became a director in October 1997 and our Lead Director in January 2008. Ms. Hawthorne has served as Chair and Chief Executive Officer of Clerestory, LLC, a financial advisory and investment firm, since August 2001. Previously, Ms. Hawthorne served as Chief Executive Officer and Managing Partner of Hawthorne, Krauss & Associates, LLC, a provider of consulting services to corporate management, and as Chief Financial Officer and Treasurer of Continental Cablevision. Ms. Hawthorne also serves as a director of the Metropolitan Series Fund, Inc. Having served on our board for over twelve years, Ms. Hawthorne has gained significant knowledge of our business. Ms. Hawthorne's financial, management and outside board experience enhance her contributions to our board. Ms. Hawthorne also offers a unique perspective, having served as interim Chief Executive Officer of Avid from July to December 2008.

        John H. Park, 42, became a director in June 2007. Mr. Park has been a partner of Blum Capital Partners, L.P., a private equity firm, since May 2004. Prior to joining Blum Capital Partners, Mr. Park spent 11 years with Columbia Wanger Asset Management, L.P., where he was a partner and the Portfolio Manager of the Columbia Acorn Select Fund and a Co-Portfolio Manager of the Columbia Acorn Fund. Mr. Park also serves as a director of GlenRose Instruments, Inc. Our board of directors benefits from Mr. Park's demonstrated business acumen gained through extensive private equity and fund investment experience, experience on other public company boards of directors and participation in corporate turn-around efforts. We also benefit from the stockholder perspective he lends as a partner of Blum Capital Partners, L.P., an Avid investor.

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DIRECTOR COMPENSATION

        Our company uses a combination of cash and equity-based compensation to attract and retain individuals to serve on our board of directors. We only compensate outside directors for their service on our board of directors. An outside director is a member of our board of directors who is not:

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an employee of our company or any subsidiary of our company;



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a significant stockholder, meaning the beneficial owner of 10% or more of our outstanding common stock; or



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a stockholder, member or partner of a significant stockholder.

Gary G. Greenfield, our Chairman, President and Chief Executive Officer, and John H. Park, a partner of a significant stockholder of our company, are not outside directors, and therefore, do not receive any compensation for their service on our board of directors.

Cash Compensation for Outside Directors

        Our outside directors are paid the following cash compensation for their service:

Board of Directors
Lead Director: $75,000 annual retainer and $6,000 per meeting
Other Outside Members: $45,000 annual retainer and $3,000 per meeting

Audit Committee
Chair: $25,000 annual retainer and $6,000 per meeting
Other Outside Members: $7,500 annual retainer and $3,000 per meeting

Compensation Committee
Chair: $15,000 annual retainer and $6,000 per meeting
Other Outside Members: $5,000 annual retainer and $3,000 per meeting

Nominating and Governance Committee
Chair: $15,000 annual retainer and $6,000 per meeting
Other Outside Members: $5,000 annual retainer and $3,000 per meeting

Strategy Committee
Chair and Outside Members: $500 per meeting

        With the exception of the strategy committee, the amounts listed above were set in February 2008 and took effect on July 1, 2008. Our board of directors met in February 2009 to review and determine compensation for our outside directors and decided not to make any changes to cash compensation. Our board of directors made this determination after reviewing market data from the 2009 Avid Peer Group and third party survey data. For more information on the Avid Peer Group, see the section of our Compensation Discussion and Analysis entitled Other Considerations—Role of Peer Group, Survey Data and Benchmarking.

        On June 17, 2009, our board of directors established a strategy committee. The compensation committee determined compensation for strategy committee members as $500 per meeting attended with no annual retainer.

        Our compensation committee met in February 2010 to review compensation for our outside directors. The compensation committee reviewed third-party survey data, including the 2010 Avid Peer Group and published survey sources. After reviewing the compensation information, our compensation committee concluded that the outside directors' cash and equity compensation is competitive.

Equity Compensation for Outside Directors

        In addition to the cash compensation described above, outside directors are entitled to receive equity compensation. Effective May 21, 2008, the date our stockholders approved our Amended and Restated 2005 Stock Incentive Plan, all equity compensation awarded to outside directors is granted under our Amended

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and Restated 2005 Stock Incentive Plan. Our board of directors reviews equity compensation for outside directors annually. Previously, outside directors received equity compensation under our 1993 Director Stock Option Plan or our 2005 Stock Incentive Plan, as amended.

        Under our Amended and Restated 2005 Stock Incentive Plan, each outside director is entitled to receive equity compensation subject to the following limits:

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upon election to our board of directors, an option for up to 15,000 shares of common stock or a restricted stock award or a restricted stock unit award for up to 7,500 shares of common stock; and



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annually on the date of our annual meeting, if the outside director has served a minimum of six months on our board of directors, an option for up to 15,000 shares of common stock or a restricted stock award or a restricted stock unit award for up to 7,500 shares of common stock.

        In each case, an outside director may receive a combination of awards so long as the total number of shares subject to the aggregate award does not exceed 15,000 shares of common stock, with each share of common stock subject to a restricted stock award or a restricted stock unit award considered two shares of common stock for the purpose of this limitation.

        Grants of options to outside directors are at an exercise price per share equal to the closing price of our common stock on NASDAQ on the grant date. Grants of options to outside directors upon their initial election to our board of directors vest in full twelve months from the grant date. Annual grants of options to outside directors vest in full on the earlier of twelve months from the grant date or the business day prior to the date of the next annual meeting of stockholders following the grant date, unless otherwise specified in the applicable option agreement. Awards of restricted stock and restricted stock units to our outside directors vest in full on the earlier of twelve months from the grant date or the business day prior to the date of the next annual meeting of stockholders following the grant date. Options granted under our 1993 Director Stock Option Plan have a term of six years, those granted under our 2005 Stock Incentive Plan have a term of ten years, and those granted under our Amended and Restated 2005 Stock Incentive Plan have a term of seven years.

Changes to 2009 Equity Compensation for Outside Directors

        In 2008, each of our outside directors was granted under our Amended and Restated 2005 Stock Incentive Plan (i) 1,000 restricted stock units and (ii) an option to purchase 7,000 shares of common stock at an exercise price of $21.77, equal to the closing price of our common stock on NASDAQ on the grant date, May 21, 2008. Our board of directors met in February 2009 to review and determine compensation for our outside directors and decided to increase the equity compensation for our outside directors. On May 28, 2009, the date of our 2009 Annual Meeting of Stockholders, each of our outside directors who had served a minimum of six months on our board of directors received (i) 2,000 restricted stock units and (ii) an option to purchase 7,000 shares of common stock at an exercise price of $14.15, equal to the closing price of our common stock on NASDAQ on the grant date, May 28, 2009. Our board of directors increased the equity compensation for our outside directors after reviewing third-party survey data and outside director compensation data provided by Watson Wyatt, our compensation committee's former independent compensation consultant, and concluding that the outside directors' equity compensation should be increased in order to remain competitive.

Stock Ownership Guidelines for Outside Directors

        Stock ownership guidelines for our outside directors were adopted by our board of directors and became effective on May 24, 2006 to further align the interests of our outside directors with those of our stockholders. Under the guidelines, our outside directors are expected to hold the following number of shares of common stock:

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at least 10,000 shares of common stock one year after the later of May 24, 2006 or the date the director first receives an option grant; and



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at least 20,000 shares of common stock three years after the later of May 24, 2006 or the date the director first receives an option grant.

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        For purposes of these guidelines, stock ownership includes:

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restricted stock;



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shares held in a brokerage account in the name of the director; and



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shares underlying fully-vested options.

        A director who fails to comply with these stock ownership guidelines will be required to retain future awards of equity compensation until the thresholds are achieved.

        Messrs. Bakish and Mullen have served on our board of directors for less than one year and therefore have not yet reached a measurement date under our stock ownership guidelines. All of our other outside directors have met our stock ownership guidelines. See the section of this proxy statement entitled Security Ownership of Certain Beneficial Owners and Management for more detailed information on the beneficial ownership of our directors.

Non-Qualified Deferred Compensation for Outside Directors

        Our outside directors are eligible to participate in our non-qualified deferred compensation plan, which was established to provide participants with the opportunity to defer the receipt of all or a portion of their director fees. Only one of our directors currently participates in our plan. See the section of this proxy statement entitled Non-Qualified Deferred Compensation for a discussion of our non-qualified deferred compensation plan.

DIRECTOR COMPENSATION TABLE FOR FISCAL YEAR 2009

        The following table sets forth a summary of the compensation we paid to our directors for service on our board in 2009. Mr. Greenfield is a Named Executive Officer and, for this reason, is not listed in the following table and does not receive compensation for his services on our board. All of Mr. Greenfield's compensation information for 2009 is reported in the Summary Compensation Table.

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ADDITIONAL INFORMATION ABOUT FEES EARNED OR PAID IN CASH IN FISCAL YEAR 2009

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EXECUTIVE OFFICERS

        Set forth below are the names and ages of each of our executive officers, the position(s) currently held by each person and the principal occupation held by each person for at least the past five years.

        Gary G. Greenfield is our Chairman, President, and Chief Executive Officer. Please see the section of this proxy statement entitled Directors for his biography.

        Kirk E. Arnold has served as Executive Vice President and Chief Operating Officer since July 2009. Prior to that, she served as Executive Vice President of Customer Operations from July 2008 to July 2009 and Executive Vice President and General Manager of Professional Video from February 2008 to July 2008. Prior to joining us, Ms. Arnold was Vice Chairman, Chief Executive Officer and President of Keane Inc., a global consulting and outsourcing firm, from January 2007 to June 2007. Prior to that, she was at Fidelity Investments, serving as Executive Vice President of Product, Marketing and Strategy for the Human Resources Outsourcing Group, Fidelity's business process outsourcing unit, from June 2004 to January 2007, and as Senior Vice President of Sales and Market for Fidelity Institutional Retirement Services Company from June 2003 to June 2004. Prior to joining Fidelity, Ms. Arnold served as President and Chief Executive Officer of NerveWire, Inc., a venture-backed information technology services business that she helped launch, from February 2002 to February 2003, and as NerveWire's President and Chief Operating Officer from February 2000 to February 2002.

        Christopher C. Gahagan has served as Senior Vice President, Products since July 2009. Between March 2002 and the time he joined us, Mr. Gahagan served in various capacities at EMC Corporation, a provider of storage systems, software and services to support information storage and management strategies, most recently as Senior Vice President and General Manager of the Resource Management Software group. Prior to that, he held senior management positions at BMC Software, Inc., Sterling Software, Inc., and Spectra Logic Corporation. Mr. Gahagan began his career as a member of the technical staff at Hewlett Packard Company.

        Glover H. Lawrence has served as Vice President of Corporate Development since August 2008. Prior to joining us, Mr. Lawrence was a Managing Director and co-founder of McNamee Lawrence and Co., a global investment banking advisory firm, from March 2002 to December 2007. Prior to that, he was a Managing Director with the Oracle Venture Fund. Mr. Lawrence began his career at Morgan Stanley & Co. working in New York and Tokyo followed by several years with the technology investment banking firm Hambrecht & Quist.

        Paige Parisi has served as Vice President, General Counsel and Corporate Secretary since May 2006. From June 2003 to May 2006, Ms. Parisi was Corporate Counsel for us. Ms. Parisi also served as our outside counsel while in private practice at WilmerHale from 1997 to 2003. Prior to beginning her law career, Ms. Parisi was a news producer for the CBS Evening News and NBC Nightly News.

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        Ken Sexton has served as Chief Financial Officer since July 2008 and Executive Vice President and Chief Administrative Officer since January 2008. Prior to joining us, in 2007 Mr. Sexton served as Executive Vice President and Chief Financial Officer of webMethods, Inc., a provider of business integration software solutions. In 2006, he was Executive Vice President and Chief Financial Officer of Infor, Inc., a private software company focused on enterprise resource planning software solutions. From 2004 to 2005, Mr. Sexton was Chief Executive Officer and Chairman of the Board of Axentis, Inc., a privately held provider of enterprise governance, risk and compliance management software. From 2002 to 2004, Mr. Sexton was Executive Vice President and Chief Financial Officer of Peregrine Systems, Inc., an infrastructure management software company.

        Martin Vann has served as Senior Vice President of Worldwide Sales and Professional Services since August 2009. He joined Avid in July 2008 as Vice President of Sales and Professional Services for our Video business unit. From January 2003 to July 2008, Mr. Vann held various positions at Autodesk, a provider of 2D and 3D design and engineering software and services. Mr. Vann's most recent position at Autodesk was Vice President of Worldwide Systems Sales for the Media and Entertainment Division, and his other positions included the following: Vice President of Sales, Americas for the Media and Entertainment Division, Vice President of Worldwide Sales for the Media and Entertainment Division, Vice President of Sales, Marketing and Support for the Discreet Division of Autodesk and Vice President of the Media and Entertainment Division.

SECURITY OWNERSHIP

Security Ownership of Certain Beneficial Owners and Management

        The following table provides information with respect to the beneficial ownership of our common stock by:

•

each person known by us to beneficially own more than 5% of the outstanding shares of our common stock;



•

each of our directors;



•

each executive officer named in the Summary Compensation Table; and



•

all of our directors and executive officers as a group.

        Except as otherwise noted, information in the following table is as of February 28, 2010. The number of shares beneficially owned by each person or entity is calculated pursuant to rules promulgated by the SEC. Under those rules, a person or entity is considered to beneficially own all shares for which the person or entity has sole or shared voting or investment power, and all shares that the person or entity has the right to acquire within 60 days after February 28, 2010.

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Section 16(a) Beneficial Ownership Reporting Compliance

        Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires our directors, executive officers and the holders of more than 10% of our common stock to file with the SEC initial reports of ownership of our common stock and other equity securities on a Form 3 and reports of changes in ownership on a Form 4 or a Form 5. Officers, directors and 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms that they file. To our knowledge, based solely on a review of copies of reports filed by the persons required to file these reports and written representations from those persons, we believe that all filing requirements of Section 16(a) were satisfied with respect to the year ended December 31, 2009.

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CORPORATE GOVERNANCE MATTERS

Board Meetings and Consents

        During 2009, our board of directors met 10 times and acted by written consent three times. Each director was present for at least 75% of the aggregate number of board meetings and meetings held by all committees on which that director then served. Our corporate governance guidelines provide that directors are expected to attend our annual meeting of stockholders. All of our then-serving directors attended our 2009 annual meeting.

Board Committees

        Our board of directors has a standing audit committee, compensation committee, nominating and governance committee and strategy committee. With the exception of the strategy committee, each committee operates under a charter that has been approved by our board of directors. Each committee reviews its charter periodically and recommends any proposed revisions to our board of directors for approval. The audit committee charter was last revised in February 2005, the compensation committee charter was last revised in May 2007, and the nominating and governance committee charter was last revised in February 2008. A copy of each committee's charter can be accessed from the corporate governance page in the investor relations section of our website at www.avid.com. Members of each committee are generally elected by our board of directors upon recommendation from our nominating and governance committee. Each of the committees is authorized to retain independent legal, accounting and other advisors, and to compensate them for their services.

        Our board of directors has determined that, other than Mr. Greenfield, each of our current directors is an independent director as defined under NASDAQ rules. Additionally, each of the committees is, and at all times during 2009 was, composed of independent directors as defined by the NASDAQ rules.

        Audit Committee.    Our board of directors has determined that each of Messrs. Billings and Mullen is an "audit committee financial expert" as defined in Item 407(d)(5) of Regulation S-K. In addition, our board of directors has determined that the members of our audit committee meet the additional independence criteria required for audit committee membership under applicable NASDAQ listing standards. The committee's responsibilities include:

•

appointing, as well as approving the compensation and assessing the independence of, our independent registered public accounting firm;



•

overseeing the work of our independent registered public accounting firm, including reviewing certain reports required to be made to the audit committee by the independent registered public accounting firm;



•

overseeing the work of our internal audit function, including approving the internal audit annual plan submitted by the internal auditing staff;



•

reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures;



•

reviewing, approving and ratifying related person transactions;



•

monitoring our internal controls over financial reporting, disclosure controls and procedures; and



•

meeting independently with our internal auditing staff, our independent registered public accounting firm and management.

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Our audit committee met 17 times during 2009.

        Compensation Committee.    The committee's responsibilities include:

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administering our executive officer compensation program;



•

overseeing the development of our compensation plans and policies;



•

annually reviewing and approving an appropriate peer group against which executive compensation is compared;



•

annually reviewing and approving corporate financial performance goals relevant to the compensation of our executive officers;



•

overseeing performance evaluations of our executive officers;



•

administering our equity incentive plans; and



•

reviewing and making recommendations to our board of directors with respect to director compensation.

Our compensation committee met six times and acted by written consent once during 2009.

        Our compensation committee has established a Section 162(m) subcommittee for the purpose of approving compensation matters for which the committee seeks compliance with Section 162(m) of the Internal Revenue Code of 1986, as amended. Each of the current members of the subcommittee is considered independent for purposes of Section 162(m) of the Internal Revenue Code. The subcommittee met twice and acted by written consent twice in 2009. For more information on the Section 162(m) subcommittee, see the section of our Compensation Discussion and Analysis entitled Other Considerations—Policy With Respect To Tax Deductibility of Executive Compensation.

        Nominating and Governance Committee.    The committee's responsibilities include:

•

identifying individuals qualified to become members of our board of directors;



•

recommending to our board of directors persons to be nominated for election as directors and to each of the committees of our board of directors;



•

developing and recommending to our board of directors corporate governance principles; and



•

overseeing an evaluation of our board of directors.

Our nominating and governance committee met five times during 2009.

        Strategy Committee.    The committee's responsibilities include reviewing, evaluating and making recommendations to our board with regard to potential acquisition opportunities and/or the financing thereof. Our strategy committee met three times during 2009.

Director Nomination Process

        The process followed by our nominating and governance committee to identify and evaluate director candidates consists of reviewing recommendations from members of our board of directors, search firms that we engage from time to time, and others (including stockholders) and evaluating biographical and background information relating to potential candidates.

        In considering whether to recommend a particular candidate for inclusion on our board of directors' slate of recommended director nominees, our nominating and governance committee considers the criteria set forth in our corporate governance guidelines. These criteria include the candidate's integrity, business acumen, knowledge of our business and industry, age, experience, and commitment to participate as a director, as well as the diversity of our board and conflicts of interest that would impair the candidate's ability to act in the interests of all stockholders. Our nominating and governance committee does not assign specific weights to particular criteria and no particular criterion is a prerequisite for all prospective nominees. Our corporate governance guidelines also provide that the nominating and governance committee

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will review with the board of directors the requisite skills and criteria for new board members as well as the composition of the board as a whole, including the consideration of diversity, age, skills, experience, geographic representation, gender, race and national origin, and other experience in the context of the needs of the board. Our nominating and governance committee believes that the backgrounds and qualifications of our directors, considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow our board of directors to fulfill its responsibilities.

        Stockholders may recommend an individual to our nominating and governance committee for consideration as a potential director candidate by submitting the individual's name, together with information regarding the individual's background, qualifications and experience, to the Nominating and Governance Committee, c/o Corporate Secretary, Avid, One Park West, Tewksbury, Massachusetts 01876, or by email to Avid.Secretary@avid.com.

        Assuming that appropriate biographical and background material has been provided on a timely basis, our nominating and governance committee will evaluate stockholder-recommended candidates by substantially following the same process, and considering the same criteria, as it follows for candidates submitted by others. If our board of directors decides to nominate a stockholder-recommended candidate and recommends his or her election, then his or her name will be included in our proxy materials for the next annual meeting.

Board Leadership

        The leadership structure of our board of directors includes our Chairman, Gary Greenfield, who is also our Chief Executive Officer, and our Lead Director, Nancy Hawthorne. Our board of directors determines whether the roles of chairman and chief executive officer should be separated or combined based on its judgment as to the structure that best serves the interests of the company and our stockholders. The board of directors believes that the combined role of chairman and chief executive officer promotes strategy development and execution, and facilitates information flow between management and the board, which are essential for effective governance. Our board believes the combined role of chairman and chief executive officer, together with a lead independent director having the duties described below, is in the best interest of stockholders because it provides the appropriate balance between strategy development and independent oversight of management.

        In December 2007, in connection with hiring Mr. Greenfield as our Chief Executive Officer, we combined these roles in the belief that this would facilitate the launch and execution of our corporate transformation strategy by centralizing our leadership. Mr. Greenfield's current employment agreement also includes a provision that the removal or failure to reappoint him as Chairman permits him to terminate his employment for good reason; for a summary of the consequences of a "good reason" termination, see the section of this proxy statement entitled Potential Payments upon Termination Other Than Following a Change-in-Control.

        Our corporate governance guidelines provide for a Lead Director who must be independent and approved by a majority of the independent directors, and who shall:

•

consult with the Chairman in preparing the agenda for each meeting of the board of directors and determining the need for special meetings of the board of directors;



•

facilitate communications between other members of the board of directors and the Chairman and/or the Chief Executive Officer (however, each director is free to communicate directly with the Chairman and with the Chief Executive Officer);



•

provide direct input to the nominating and governance committee with respect to the selection of director nominees; and



•

otherwise consult with the Chairman and/or the Chief Executive Officer on matters relating to corporate governance and board performance.

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The Board's Role in Risk Oversight

        Risk is an integral part of board of director deliberations throughout the year. Management is responsible for the day-to-day management of risks the company faces, while the board, as a whole and through its committees, has responsibility for the oversight of risk management. Our board oversees an enterprise-wide approach to risk management, designed to improve long-term performance and enhance stockholder value. Annually, our board of directors and management assess the primary operational and strategic risks facing our company, their relative magnitude, and plans for mitigating these risks. The board of directors believes that full and open communication between management and the board are essential for effective risk management and oversight. The board of directors receives regular presentations from senior management on strategic matters involving our operations. The board also holds an annual strategic planning meeting with senior management and other key employees to discuss strategies, key challenges and risks and opportunities for the company.

        While the board of directors oversees the risk management process, our board's committees assist the board in fulfilling its oversight responsibilities in certain areas of risk. The audit committee focuses on financial risk, including the areas of financial reporting, internal controls, and compliance with legal and regulatory requirements. The compensation committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The nominating and governance committee manages risks associated with corporate governance, board organization, membership and structure.

Compensation Committee Interlocks and Insider Participation

        During fiscal year 2009, Elizabeth M. Daley, Nancy Hawthorne, Louis Hernandez, Jr., Youngme E. Moon, and John. H. Park each served on our compensation committee. Ms. Hawthorne served as our interim Chief Executive Officer from July 2007 to December 2007 and as our President in December 2007. None of our executive officers is a member of the compensation committee or a director of another corporation or other entity (or serves an equivalent function for another corporation or other entity) that has an executive officer who serves on our board of directors.

Related Person Transaction Policy

        Our board of directors has adopted a written policy and procedures for the review of any transaction, arrangement or relationship in which our company is a participant, the amount involved exceeds $120,000, and one of our executive officers, directors, director nominees or 5% stockholders (or their immediate family members), whom we refer to as "related persons," has a direct or indirect material interest.

        If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a "related person transaction," he or she must report the proposed related person transaction to our General Counsel. The policy calls for the proposed related person transaction to be reviewed and, if deemed appropriate, approved by our audit committee. Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction. If advance review is not practicable, our audit committee may ratify the related person transaction. Any related person transactions that are ongoing in nature will be reviewed annually by the audit committee. As required under rules issued by the SEC, related person transactions that are determined to be directly or indirectly material to our company or a related person are disclosed in our proxy statement.

        A related person transaction reviewed under the policy will be considered approved or ratified if it is authorized by our audit committee after full disclosure of the related person's interest in the transaction. As appropriate for the circumstances, our audit committee will review and consider:

•

the related person's interest in the transaction;



•

the approximate dollar value of the transaction;



•

the approximate dollar value of the related person's interest in the transaction;



•

whether the transaction was undertaken in the ordinary course of business;

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whether the terms of the transaction are no less favorable to our company than terms that could be reached with an unrelated third party;



•

the purpose, and the potential benefits to our company, of the transaction; and



•

any other information regarding the transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.

        Our audit committee may approve or ratify the transaction only if it determines that, under the circumstances, the transaction is not inconsistent with our company's best interests.

EXECUTIVE COMPENSATION

Compensation Committee Report

        The following report of the compensation committee is not "soliciting material," is not deemed "filed" with the SEC and is not to be incorporated by reference into any of our filings under the Securities Act of 1933 or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

        The compensation committee consists of four non-employee directors: Messrs. Bakish, Hernandez and Park and Ms. Hawthorne, each of whom is independent under the applicable NASDAQ and SEC rules. The compensation committee has certain duties and powers as described in its charter adopted by the board of directors. A copy of the charter can be accessed from the corporate governance page in the investor relations section of the company's website at www.avid.com.

        The compensation committee has reviewed and discussed with management the disclosures contained in the following section of this proxy statement, entitled Compensation Discussion and Analysis. Based on this review and discussion, the compensation committee recommended to our board of directors that the section entitled Compensation Discussion and Analysis be included in this proxy statement for our annual meeting.

Compensation Discussion and Analysis

        The purpose of this section of our proxy statement is to provide an overview of our executive compensation program, the material decisions we made with respect to each element of our executive compensation program and the material factors that we considered in making those decisions. Throughout this proxy statement, we refer to the following "Named Executive Officers":

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Following this section of the proxy statement, you will find a series of tables containing specific information about the compensation earned or paid in 2009 to our Named Executive Officers. This section of the proxy statement is designed to put that information into context within our overall executive compensation program.

Executive Summary

        The goal of our executive compensation program is to attract, motivate and retain those individuals who have the talent, experience, drive and leadership skills necessary to successfully achieve our goals of sustainable profitable growth and the creation of long-term value for our stockholders. Our compensation committee administers our executive officer compensation program and our Chief Executive Officer provides recommendations on compensation matters for all executive officers other than himself. Our executive compensation program consists of the following four elements:

•

base salaries;



•

annual performance-based cash bonuses;



•

performance-based and time-based long-term equity awards; and



•

other benefits.

The types of compensation provided to our Named Executive Officers are the same as those provided to our other executive officers.

        In December 2007, our board of directors hired Gary Greenfield, our Chief Executive Officer, to transform our business. In 2008, Mr. Greenfield initiated this transformation by developing a new corporate strategy, reorganizing our internal structure, improving operational efficiencies, divesting non-core product lines, reducing the size of our workforce and establishing a new management team. Each of our Named Executive Officers is a key member of this new management team. Each of the following Named Executive Officers joined our company, assumed a new management role or was promoted to become an executive officer in 2009:

•

Christopher Gahagan joined our company in July 2009 as Senior Vice President of Products.



•

Kirk Arnold joined our company in February 2008 as Executive Vice President and General Manager, Video. In July 2008, Ms. Arnold was promoted to Executive Vice President of Customer Operations, and in July 2009, she was promoted to Executive Vice President and Chief Operating Officer.



•

Martin Vann joined our company in July 2008 as Vice President of Sales and Professional Services for our Video business unit. In August 2009, he was promoted to Senior Vice President of Worldwide Sales and Professional Services.

        Much of our Named Executive Officers' current compensation is based on their executive employment agreements, which reflect the levels of compensation that our compensation committee determined to be necessary to attract, retain and incentivize these individuals at those times. These determinations were influenced by factors such as experience, qualifications, previous compensation levels and internal pay equity. Published industry survey data was also utilized to review competitive total compensation for each of these roles.

        Executive officer compensation is reviewed on an annual basis by our compensation committee. When our compensation committee reviewed executive officer compensation during the first quarter of 2009, it determined that none of the executive officers would receive an increase in his or her salary due to the continued global economic downturn and the fact that all but one of the executive officers were either new hires who had recently negotiated compensation packages or existing employees whose compensation packages had been adjusted during the year as the result of a promotion. In addition, because the company failed to meet its threshold financial performance target under our performance-based annual executive bonus plan, no cash bonuses were paid to executive officers under the 2009 plan. The compensation committee determined, however, that two of our Named Executive Officers, Mr. Sexton and Ms. Arnold, would receive long-term equity grants in 2009 for exemplary performance.

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        When our compensation committee reviewed executive officer compensation in the first quarter of 2010, it reviewed each executive's compensation against peer group and third-party survey data. Additionally, it considered individual performance, time in role, criticality of role to company success and retention in determining appropriate total compensation. Compensation decisions made in 2010 have been largely driven by an emphasis on our company's future performance, individual performance and the philosophy set forth in the following subsection of this Compensation Discussion and Analysis.

Executive Compensation Philosophy and Program Design

        To further our goals of sustainable profitable growth and the creation of long-term stockholder value, our compensation committee designs the executive officer compensation program to achieve the following objectives:

•

hire, retain and reward the best individuals for each job;



•

link a substantial portion of executive pay to company performance;



•

align the short- and long-term interests of our executive officers with those of our stockholders;



•

encourage a team-based leadership culture; and



•

make certain that each of the components of our program is transparent so that the program is easily understood by our stockholders.

        In order to accomplish these objectives, our compensation committee:

•

awards a mix of performance-based and time-based equity, with a greater percentage of the mix being tied to our company's financial performance and stock price;



•

sets common company financial performance goals for all executive officers under our annual cash incentive compensation program that focus on achievement of key financial metrics and encourage a team-based culture;



•

prior to setting annual compensation, reviews tally sheets for executive officers, which include all components of their compensation: base salary, annual cash incentive compensation, long-term equity incentive compensation, the dollar value to the executive and cost to our company of all perquisites and other personal benefits, and the estimated payout obligations under severance and change-in-control agreements;



•

seeks input from our Chief Executive Officer on the performance of all other executive officers; and



•

receives reports from its independent compensation consultant on the executive compensation practices of members of a relevant peer group.

        Our compensation committee believes that our executive compensation program's design promotes the creation of long-term value and discourages behavior that leads to excessive risk. Base salaries are fixed in amount and thus do not encourage risk taking. While the annual cash bonus awards focus on the achievement of annual goals, which could encourage the taking of short-term risks at the expense of long-term results, the committee strives to mitigate this potential risk by capping payouts and tying them to a mix of company financial metrics which the committee believes drive long-term stockholder value. Moreover, the majority of compensation provided to the Named Executive Officers is in the form of long-term equity awards that help further align their interests with those of our stockholders. The value and vesting of most of our long-term equity awards are tied to our stock price and our company's return on equity, which the committee believes encourages the creation of long-term value and reduces excessive risk.

Role of our Chief Executive Officer

        Our Chief Executive Officer plays an important role in setting executive officer compensation other than his own. Although he does not have the ability to call compensation committee meetings, our Chief Executive Officer attends most meetings at the invitation of the committee.

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        Each year, our Chief Executive Officer, with the assistance of members of our human resources and finance departments, makes a recommendation to our compensation committee regarding base salary, annual cash bonus targets and performance criteria, and the forms and amount of long-term equity incentive compensation for all executive officers other than himself. Our Chief Executive Officer bases this recommendation on our business results for the previous year, each executive officer's individual performance, the criticality of the role of each executive officer, retention and internal equity considerations, and external market data from a peer group of companies and published industry survey data. Upon request from our compensation committee, our Chief Executive Officer also provides input on the types of other benefits, if any, to be offered to executive officers.

        Our Chief Executive Officer does not make a recommendation to our compensation committee regarding his own compensation, and meets with the compensation committee's independent compensation consultant only for advice and expertise on matters presented to the compensation committee.

Other Considerations

        Role of our Compensation Consultant

        Each year our compensation committee engages an independent compensation consultant to advise the committee on executive officer and board compensation. From 2006 to 2009, our compensation committee worked with Watson Wyatt. While Watson Wyatt acted primarily as an advisor to our compensation committee, it also provided, with the knowledge and consent of our compensation committee, advice and expertise to management on matters presented by management to our compensation committee. Watson Wyatt also assisted our treasurer with valuations of our performance-based equity under Statement of Financial Accounting Standards No. 123(R). In the fall of 2009, our compensation committee sought proposals from two other compensation consultants and in October 2009 selected Pearl Meyer as its new compensation consultant. Pearl Meyer acts primarily as an advisor to our compensation committee, but it also provides, with the knowledge and consent of our compensation committee, advice and expertise to management on matters presented by management to our compensation committee. Our compensation committee has the sole authority to hire and fire its compensation consultant. Our company does not retain its own compensation consultant; however, Watson Wyatt continues to assist our treasurer with valuations of performance-base equity.

        Our compensation committee set 2009 and 2010 annual executive compensation in the first quarter of each respective year. The nature and scope of the assignments for both Watson Wyatt for 2009 and Pearl Meyer for 2010 annual executive compensation included:

•

reviewing our peer group to determine if the group remained appropriate;



•

preparing an executive compensation pay study and competitive assessment to compare our executive compensation to our peer group and published industry survey data, addressing the following aspects of executive officer compensation: base salary, short-term incentive compensation and long-term incentive compensation, and mix of pay; and



•

in connection with our executive officer termination benefits, calculating any applicable parachute payments and gross-up amounts related to excise taxes under Sections 280G and 4999 of the Internal Revenue Code.

        Role of Peer Group, Survey Data and Benchmarking

        For purposes of comparing our executive compensation program with market practices, our compensation committee, with the assistance of its independent compensation consultant, reviews executive compensation from a peer group of companies, which we refer to as the "Avid Peer Group."

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        The Avid Peer Group for purposes of setting 2009 annual executive compensation included the following 12 companies:

        These companies are high-technology companies with similar revenues and market capitalizations to us and are among the companies with whom we compete for talent. These companies had a median market capitalization as of October 31, 2008 of approximately $1.57 billion, compared to our market capitalization of approximately $550 million; and median annual revenues of approximately $1.2 billion, compared to our revenue of approximately $897 million. The annual revenues were determined by tallying each company's publicly available quarterly revenues for the four most recently completed fiscal quarters as of November 20, 2008.

        When setting 2010 annual executive compensation, our compensation committee, with the assistance of Pearl Meyer, reviewed the Avid Peer Group with the goal of achieving a balance of smaller and larger-sized peer companies in terms of revenue and market capitalizations, which were also similar in terms of product/service offerings. In November 2009, our compensation committee removed Brocade Communications Systems, Inc. and Itron, Inc., and added Novell Inc., RealNetworks Inc. and Zoran Corp. Brocade and Itron were removed because their product/service offerings were not similar enough to our company's products and services. Novell, RealNetworks and Zoran were added due to their similarity to us in product/service offerings and their fit within our compensation committee's goal of achieving a balance of smaller and larger-sized peer companies. This 2010 Avid Peer Group, among other things, had a median market capitalization of approximately $1.6 billion as of October 30, 2009, compared to our market capitalization of approximately $472 million and median annual revenues of approximately $891 million, compared to approximately $663 million in revenues for us. The annual revenues were determined by tallying each company's publicly available quarterly revenues for the four most recently completed fiscal quarters as of November 4, 2009.

        In addition to reviewing the executive compensation practices of companies in the Avid Peer Group, our compensation committee, with the assistance of its independent compensation consultant, also reviews executive compensation from published industry surveys for purposes of comparing our executive compensation program with market practices. When setting 2009 annual executive compensation, our compensation committee reviewed information from The Radford High Technology Executive Compensation Survey and The Watson Wyatt Top Management Survey. For 2010 executive compensation, our compensation committee reviewed information from the CHiPS Executive and Senior Management Total Compensation Survey, The Radford High Technology Executive Compensation Survey and The Watson Wyatt Top Management Survey. We refer to these surveys collectively as the "published industry survey data."

        When determining 2009 executive compensation, our compensation committee reviewed the executive compensation practices of companies in the Avid Peer Group or the published industry survey data to help ensure that each of our executive officer's base salary, total annual cash compensation and total direct compensation (base salary, annual cash incentive compensation and long-term incentive compensation) were within a reasonably competitive range but did not target any component of executive compensation to any specific percentile of the Avid Peer Group and the published industry survey data. This review showed that, on average, our executive officers' total direct compensation was above the 75^th percentile of the Avid Peer Group and the published industry survey data; however, a significant portion of each of our executive officer's total direct compensation was in the form of equity awards that will vest only if we achieve significant improvement in our return on equity, or ROE, and if our stock price increases significantly. Our

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compensation committee believes that tying executive compensation to our financial performance aligns the interests of our executive officers with the interests of our stockholders.

        In July 2009, when reviewing compensation packages in connection with the hiring of Mr. Gahagan and the promotion of Ms. Arnold, our compensation committee reviewed additional third party data to obtain a general understanding of compensation practices.

        When determining 2010 executive compensation, our compensation committee again reviewed the executive compensation practices of companies in the Avid Peer Group and the published industry survey. This review indicated that certain officers were below the 50^th percentile of the 2010 Avid Peer Group and published industry survey data and this became a factor in 2010 executive compensation decisions.

        Policy With Respect To Tax Deductibility of Executive Compensation

        Section 162(m) of the Internal Revenue Code of 1986, as amended, places a limit of $1,000,000 per person on the amount of compensation that a public company may deduct in any year with respect to its chief executive officer and the three most highly compensated named executive officers employed by the company at the end of the year (other than the company's chief financial officer). However, some forms of performance-based compensation are excluded from the $1,000,000 deduction limit if certain requirements are met.

        To qualify as performance-based compensation, the compensation must be approved by a committee where the only persons determining the approval are two or more "outside directors," none of whom has ever been employed by the company or its subsidiaries. All of the members of our compensation committee qualify as outside directors under the Internal Revenue Service, or IRS, definition except Ms. Hawthorne. Although Ms. Hawthorne is an independent director under the applicable NASDAQ and SEC rules, she does not qualify as an outside director under the IRS definition because she served as our interim Chief Executive Officer during 2008. For this reason, our compensation committee established a 162(m) subcommittee in 2008 whose members include all of the members of our compensation committee except Ms. Hawthorne. The 162(m) subcommittee approves all 162(m)-related matters.

        Salaries and time-based restricted stock awards for our Named Executive Officers do not qualify as performance-based compensation. Potential cash bonuses awarded under our performance-based annual cash bonus plan also do not qualify as performance-based compensation because our annual bonus plan is not a stockholder-approved plan. In general, options granted to our Named Executive Officers are intended to qualify as performance-based compensation under section 162(m). In addition, performance-based restricted stock awards granted to our Named Executive Officers are intended to qualify as performance-based compensation under 162(m) because they are based on pre-determined goals established by our 162(m) subcommittee pursuant to a stockholder-approved stock incentive plan.

        Our compensation committee has not adopted a policy requiring all executive compensation to be fully deductible. However, our compensation committee reviews the potential impact of section 162(m) periodically and, if consistent with its goals of sustainable profitable growth and creation of long-term stockholder value, may seek to structure executive officer compensation to allow deductions under section 162(m). Our compensation committee reserves the right to use its judgment to authorize compensation payments that may be subject to the section 162(m) limitation when it believes these payments are appropriate and in the best interests of our stockholders.

Analysis of Elements of Executive Compensation

        Base Salary

        Base salaries for our executive officers are reviewed on an annual basis, as well as at the time of a promotion or other change in responsibilities. In the first quarter of 2009, Mr. Greenfield provided our compensation committee with his recommendation regarding base salaries for 2009 for all of our executive officers besides himself. Mr. Greenfield recommended that none of the executive officers receive an increase in base salary. Mr. Greenfield based his recommendation on the uncertainty of our company's prospects in light of the continuing global economic downturn. Additionally, Mr. Greenfield believed this was consistent

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with the company-wide salary freeze in effect for 2009. Mr. Greenfield also factored into his analysis the fact that all but one of the executive officers were either recent hires who had negotiated compensation packages in 2008 or existing employees whose compensation packages had been adjusted during the year as the result of a promotion. Our compensation committee concurred with Mr. Greenfield's recommendation and determined that none of our executive officers (including Mr. Greenfield) would receive an increase in base salary for 2009.

        On July 21, 2009, Ms. Arnold was promoted to Executive Vice President and Chief Operating Officer. In connection with this promotion, she received a 5% ($30,000) increase in her base salary which was $600,000 prior to her promotion. Our compensation committee made this determination after reviewing third-party survey sources.

        In the first quarter of 2010, Mr. Greenfield provided our compensation committee with his recommendations for base salaries for 2010 for executive officers besides himself. He recommended increases for all executive officers other than those who had recently been hired or promoted. When making these recommendations, he considered individual performance and time in role, as well as the fact that certain executive officers' base salaries were below the 50^th percentile of the Avid Peer Group and the published industry survey data. Our compensation committee agreed with his recommendations. As a result, one of our Named Executive Officers, Mr. Sexton, received an increase in his base salary. Our compensation committee also reviewed Mr. Greenfield's base salary and approved an increase based on the significant role he played in the transformation of our company since he was hired in December 2007. Following are the salary increases Messrs. Greenfield and Sexton received for 2010:

        Annual Cash Incentive Compensation

        Each year we adopt an executive bonus plan that provides for cash incentive payments to our executive officers upon the achievement of certain performance objectives set forth in the plan. Any bonus payout under our annual executive bonus plan is based on an executive officer's cash bonus target. With the exception of Mr. Vann, each executive officer's cash bonus target is a fixed dollar amount ranging from 60% to 100% of such executive officer's base salary. For 2009, Mr. Vann's cash bonus target under our annual executive bonus plan was 13.3% because as Senior Vice President of Worldwide Sales and Professional Services, a portion of his cash incentive compensation was also tied to sales commissions and a management by objective plan. For a discussion of Mr. Vann's cash incentive compensation, please see the subsection below entitled Martin Vann's Cash Incentive Compensation. Bonuses for the prior year, if any, are determined and paid out in the first quarter of the subsequent year and after our company files its Annual Report on Form 10-K with the Securities and Exchange Commission, but in no event later than December 31^st of that year.

        Under the bonus plan for 2009, the bonus payout criteria for each of our executive officers were based on the financial performance of our company. Although for several years prior to 2009, the bonus payout criteria was also based in part on an executive officer's individual performance, our compensation committee made the decision to link 100% of 2009 cash incentive compensation to the financial performance of our company. This emphasis on company, rather than individual, performance was intended to drive the transformation of our company announced in 2008 and link a greater percentage of executive pay to company performance. However, for 2010 our compensation committee decided to reintroduce the individual performance component to our bonus plan and tie it to specific metrics—financial and non-financial—that each executive officer could influence, to drive the achievement of specific strategic and growth-oriented projects and goals. Nonetheless, the bonus plan for 2010 remains largely focused on company performance by tying 80% of target bonuses to our company's financial performance.

        For purposes of our bonus plan for 2009, the financial performance of our company was evaluated using weighted financial metrics. However, our company had to achieve a non-GAAP operating profit before

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bonuses would be paid under the plan, regardless of our company's performance relative to any financial metric. If the non-GAAP operating profit had been achieved, the financial metrics would have been weighted as follows:

        Assuming achievement of a non-GAAP operating profit, in order for a Named Executive Officer to receive any bonus payout with respect to a financial metric under the bonus plan for 2009, our company also had to achieve a threshold result. If the threshold had been achieved, a Named Executive Officer would have been eligible to receive 30% of the portion of his or her target bonus relating to that metric. If our company had achieved its target result, a Named Executive Officer would have been eligible to receive 100% of the portion of his or her target bonus relating to that metric, up to a maximum of 135% for achievement in excess of the target result. Results that fell between the threshold and target would have paid out on a linear basis between 30% and 100% of the portion of a Named Executive Officer's target bonus relating to a metric.

        The following table sets forth the financial metrics that governed potential payouts under the bonus plan for 2009 for our Named Executive Officers:

        Our company failed to achieve a non-GAAP operating profit in 2009 and, as a result, no bonuses were paid to our executive officers under the bonus plan for 2009. For purposes of the bonus plan for 2009, our company had a non-GAAP operating loss of $12.3 million. For purposes of calculating this operating loss, the following costs were excluded from our reported operating loss: amortization of acquisition-related intangible assets; gain or loss on sale of assets; stock-based compensation; restructuring costs; and certain costs associated with acquisitions or potential acquisitions. These items were excluded because our compensation committee believes they do not reflect the operational aspects of our business.

        Under the bonus plan for 2010, company performance accounts for 80% and individual performance accounts for 20% of the cash bonus target. Company performance is measured using two financial metrics: revenues and non-GAAP operating earnings, and each is assigned the following relative weight: revenues—40% and non-GAAP operating earnings—60%. Individual performance is measured using metrics each Named Executive Officer has the ability to influence—financial and non-financial. Each Named Executive Officer's individual performance is either partly or entirely based on one or more of the following: timely delivery of key products, achievement of a specified level of ROIC, achievement of a specified level of free cash flow and achievement of a specified amount of company revenue bookings. While 20% of the bonus plan for 2009's payout was based on ROIC, the bonus plan for 2010 did not include this metric in the company performance component of the plan. Instead, ROIC was added as an individual performance metric for those Named Executive Officers who could most directly drive these returns.

        Like the bonus plan for 2009, the bonus plan for 2010 requires the company to achieve non-GAAP operating profit in order for any bonuses to be paid, and the payments for achievement of company performance threshold and target amounts are the same: 30% and 100%, respectively. The bonus plan for 2010 increases the payment for achieving maximum operating results from 135% to 150% of the company

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performance component target but caps the maximum payout for achieving the individual performance component target at 135%. Our compensation committee believes that the target amount set for each of the financial metrics for 2010 is aggressive, yet achievable; however, the continuing global economic downturn could make the achievement of these target amounts difficult.

        In addition to our annual executive bonus plan, our compensation committee has the authority to make other cash bonus awards to our executive officers as it deems appropriate. In 2009, none of our executive officers received any such other cash bonus award.

        Martin Vann's Cash Incentive Compensation

        In addition to a cash bonus target of $49,240, or approximately 13.3% of his base salary, under our bonus plan for 2009, Mr. Vann, our Senior Vice President of Worldwide Sales and Professional Services since August 2009, had a portion of his 2009 targeted annual cash compensation tied to sales commissions. For fiscal year 2009, his commission-based cash incentive target was set at $147,720, or 40% of his base salary. He was also eligible for an additional annual cash incentive bonus of $49,240, or approximately 13.3% of his base salary, tied to a management by objective plan (MBO) which was based on Mr. Vann achieving internal operating efficiencies. Our compensation committee felt that these combined objectives provided appropriate focus on key company metrics while also offering competitive incentive for his worldwide sales and services role. Mr. Vann did not achieve his MBO target goal for 2009, and therefore did not receive any payment under his MBO. For details regarding the amount paid to Mr. Vann as sales commissions, see the Summary Compensation Table.

        In the first quarter of 2010, in connection with its annual review of executive compensation, our compensation committee approved two changes to Mr. Vann's short-term incentive compensation to (i) increase his cash bonus target under the bonus plan for 2010 to 26.7% of his base salary and (ii) approve a new MBO based on worldwide product and service bookings rather than internal operating efficiencies. As a result of these changes, his 2010 aggregate cash incentive compensation target increased from 67.7% to 80% of his base salary. Mr. Vann also surrendered for cancellation the equity award he received in August 2009. The compensation committee made this decision based on a desire to increase Mr. Vann's focus on revenue growth and align his compensation with the company's goal of achieving sustainable profitable growth.

        Long-Term Equity Incentive Compensation

        Long-term equity incentive compensation is intended to represent the largest portion of total compensation for our executive officers. We link a majority of this compensation to our company's financial performance and stock price to align executive officer compensation with our philosophy of maximizing stockholder value. Our compensation committee awards equity to our executive officers when they join our company or are promoted, in recognition of past performance and for retention purposes. The committee bases these awards on the officer's job level, experience, the requirements of the position, internal equity considerations and comparative compensation data of similar roles based on peer group and published industry survey data.

        Long-term equity incentive compensation for our executive officers consists primarily of stock options and restricted stock units that vest on the basis of the achievement of company performance metrics or on the passage of time. On average, of the total number of shares underlying the outstanding equity awards granted to our Named Executive Officers to date, 61% of such shares are performance-based and 39% are time-based. The performance-based awards and the time-based awards have the following vesting terms:

        Time-Based Awards

        Time-based options and time-based restricted stock units typically vest over a four-year period.

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        Performance-Based Awards

        Performance-based options typically vest as follows:

•

50% of the underlying shares vest on a performance-based schedule tied to our stock price as follows:



•

50% of these shares vest at the end of the first 20 consecutive trading day period following the grant date during which our common stock trades at a price per share equal to or greater than (1) $50.84 in the case of awards granted prior to March 17, 2009 and (2) $35.00 for awards made on or after March 17, 2009; and



•

50% of these shares vest at the end of the first 20 consecutive trading day period following the grant date during which our common stock trades at a price per share equal to or greater than (1) $76.26 in the case of awards granted prior to March 17, 2009 and (2) $50.00 for awards made on or after March 17, 2009; and



•

50% of the underlying shares vest on a performance-based schedule tied to our annual return on equity, or ROE, as measured by improvements against a baseline ROE. As our ROE improves from a minimum of 2% over the baseline, an increasing number of shares will vest. The shares vest in full when ROE improves 14% over the baseline. ROE is determined using non-GAAP pre-tax net income as published in our earnings releases, divided by the average common stockholder equity during the same period. Additionally, these shares vest in full at the end of the first 20 consecutive trading day period following the grant date during which our common stock trades at a price per share of at least $101.68. Any shares that are not vested at the end of the seventh calendar year will be forfeited.

        Our compensation committee reviews long-term equity incentive compensation on an annual basis as part of its annual review of executive compensation. When our compensation committee conducted its annual review of executive compensation in the first quarter of 2009, it revised the stock prices to be used as vesting triggers in the performance-based awards as described above. Given the price of our common stock at that time, the stock price vesting triggers for future awards were set at $35.00 and $50.00, rather than $50.84 and $76.26, respectively, to ensure that these awards properly incentivize our executive officers. The compensation committee also determined at this time that only two of our Named Executive Officers, Mr. Sexton and Ms. Arnold, would receive long-term incentive awards. Mr. Sexton received 9,500 restricted stock units for significantly decreasing our operating expenses and successfully integrating various systems and business processes, and Ms. Arnold received 15,000 restricted stock units for her efforts in successfully integrating several internal sales and services organizations, which had a significant impact on our achievement of our "One Avid" strategy. These restricted stock units were to vest in full on the earlier of (i) March 17, 2010 and (ii) the first date on which we publicly announced a non-GAAP operating profit for a completed 2009 fiscal quarter, which announcement occurred on January 28, 2010 when we issued our press release for fourth quarter 2009 results. These equity awards deviated from our standard equity award discussed above both in the form of equity and the vesting provisions because their primary purpose was to reward Mr. Sexton and Ms. Arnold for their significant accomplishments rather than to provide an incentive for future performance.

        On July 21, 2009, Ms. Arnold was awarded 10,000 time-based restricted stock units and an option to purchase 90,000 shares of common stock, of which 25% was time-based and 75% was performance-based, in connection with her promotion to Chief Operating Officer. Also on July 21, 2009, Mr. Gahagan was awarded 30,000 time-based restricted stock units and an option to purchase 200,000 shares of common stock, of which 25% was time-based and 75% was performance-based, as part of his new-hire compensation package. On August 19, 2009, Mr. Vann was awarded an option to purchase 50,000 shares of common stock, all of which was performance-based, in connection with his promotion to Senior Vice President of Worldwide Sales and Professional Services. For a description of the time-based vesting provisions of these equity awards, see the footnotes to the table entitled Grants of Plan-Based Awards for Fiscal Year 2009. The performance-based options for Ms. Arnold and Messrs. Gahagan and Vann follow the same vesting schedule as described in the bullets above. In addition, with respect to Mr. Vann's option grant, instead of tying vesting to the ROE metric, the vesting of this portion of his performance-based option was tied to the achievement of

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non-GAAP net profit and year-over-year revenue growth. These long-term incentive awards were determined after reviewing third-party survey sources.

        In the first quarter of 2010, in connection with its annual review of executive compensation, our compensation committee reviewed the currently outstanding equity grants held by our executive officers, including the vesting terms of performance-based equity, and determined that the performance-based equity granted prior to March 17, 2009 with stock price vesting triggers of $50.84 and $76.26 as described above was not providing the retentive value that it was originally designed to provide given that our stock price had been trading below $16 for the preceding 12 months. The compensation committee revised the vesting terms of this performance-based equity to provide that the underlying shares that were to vest based on these stock prices would also be subject to vesting in accordance with the ROE-based vesting criteria described below, so that such shares could also vest on the achievement of annual ROE targets. The compensation committee chose annual ROE as the additional performance metric in order to increase the executive officers' focus on sustainable profitable growth and the creation of long-term value for our stockholders. Before modifying these awards, our compensation committee reviewed the estimated cost to the company of making these changes.

        The modified performance-based options vest as follows:

Additionally, 50% of the underlying shares that vest solely based on stock price will vest at the end of the first 20 consecutive trading day period following the grant date during which our common stock trades at a price per share of at least $50.84 and the balance of the underlying shares that vest solely based on stock price will vest at the end of the first 20 consecutive trading day period following the grant date during which our common stock trades at a price per share of at least $76.26.

        The following table sets forth the number of shares underlying the modified performance-based options held by our Named Executive Officers:

        In the first quarter of 2010, our 162(m) subcommittee also approved new equity incentive awards to three of our Named Executive Officers as follows:

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(1)

These amounts do not reflect actual value realized by the Named Executive Officer. These amounts represent the aggregate grant date fair value of the stock awards calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718—Share-Based Payment. Amounts for 2008 and 2007 have been recalculated to comply with the new requirements. This column was prepared assuming none of the awards will be forfeited. The amounts were calculated based on their intrinsic value at the date of grant, as described in Note B, "Summary of Significant Accounting Policies—Accounting for Stock-Based Compensation," of our audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2009.

(2)

These amounts do not reflect actual value realized by the Named Executive Officer. These amounts represent the aggregate grant date fair value of the option awards calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718—Share-Based Payment. Amounts for 2008 and 2007 have been recalculated to comply with the new requirements. This column was prepared assuming none of the awards will be forfeited. The amounts were calculated as described in Note B, "Summary of Significant Accounting Policies—Accounting for Stock-Based Compensation," of our audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2009. A portion of the shares underlying each option award reflected in this column vest over time, a portion of such shares vest on a performance-based schedule tied to our stock price, and the balance of such shares vest pursuant to a performance based schedule tied to both our stock price

and our annual return on equity. The fair value of the shares underlying an option award that vest based on time was calculated using the Black-Scholes option pricing model. The fair value of the shares underlying an option award that vest pursuant to a performance-based schedule tied to our stock price was calculated using a Monte Carlo simulation. The fair value of the shares underlying an option award that vest pursuant to a performance-based schedule tied to both our stock price and our annual return on equity was calculated using both a Monte Carlo simulation and the Black-Scholes option pricing model, and the higher valuation was used. The following table sets forth the number of shares underlying each option grant that are performance-based, and the maximum potential fair value of the performance-based portion of such option as of the date of grant, assuming payout were to occur based on the achievement of maximum performance:

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(a)

On March 15, 2010, Mr. Vann surrendered this option for cancellation. See the section of our Compensation Discussion and Analysis entitled Martin Vann's Cash Incentive Compensation for further information.

(3)

"All Other Compensation" for each of the Named Executive Officers includes the following:

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(a)

With respect to fiscal year 2008, this amount represents reimbursement of relocation expenses incurred in 2008 related to Mr. Greenfield's relocation from Maryland to Massachusetts. On March 17, 2009, our compensation committee approved a one-time payment of $300,000 to Mr. Greenfield to cover additional moving costs in connection with Mr. Greenfield's relocation from Maryland to Massachusetts. Mr. Greenfield was also reimbursed $15,612 for additional relocation expenses incurred in 2009.

(b)

With respect to Mr. Greenfield, this amount represents a tax reimbursement that he received in connection with his relocation expenses. With respect to Mr. Sexton, these amounts represent tax reimbursements that he received in connection with his lodging expenses.

(c)

These amounts represent reimbursement of lodging expenses Mr. Sexton incurred in 2008 and 2009, to which he is entitled pursuant to the terms of his executive employment agreement.

(d)

Pursuant to the terms of Mr. Sexton's executive employment agreement, he is paid an allowance of $6,000 per month for commuting expenses incurred traveling to and from his home in Ohio and our company's office locations.