¨
|
Preliminary
Proxy Statement
|
¨
|
Confidential,
for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
þ
|
Definitive
Proxy Statement
|
¨
|
Definitive
Additional Materials
|
¨
|
Soliciting
Material Pursuant to
§240.14a-12
|
þ
|
No
fee required.
|
¨
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
|
(1)
|
Title
of each class of securities to which transaction
applies:
|
|
(2)
|
Aggregate
number of securities to which transaction applies:
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
|
|
(4)
|
Proposed
maximum aggregate value of transaction:
|
|
¨
|
Fee
paid previously with preliminary materials.
|
¨
|
Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
|
(1)
|
Amount
Previously Paid:
|
|
(2)
|
Form,
Schedule or Registration Statement No.:
|
|
(3)
|
Filing
Party:
|
|
(4)
|
Date
Filed:
|
|
1.
|
Elect
three directors for three-year terms expiring in 2012;
|
|
2.
|
Ratify
the Audit Committee’s appointment of PricewaterhouseCoopers LLP as
independent registered public accounting firm for our fiscal year ending
December 31, 2009;
|
|
3.
|
Consider
and vote on a stockholder proposal relating to our Rights Agreement;
and
|
|
4.
|
Transact
such other business as may properly come before the annual meeting or any
adjournment or postponement
thereof.
|
By
order of the Board of Directors,
|
||
|
||
|
||
Corporate
Secretary and Chief
Administrative
Officer
|
Your
Vote is Important to Us. Even if You Plan to Attend the Meeting in
Person,
PLEASE
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY OR
VOTE
BY TELEPHONE OR THE
INTERNET.
|
Q:
|
Why
am I receiving these materials?
|
|
A:
|
Our
Board of Directors is providing these proxy materials to you in connection
with its solicitation of proxies for use at the Internap 2009 Annual
Meeting of Stockholders, which will take place on June 18, 2009, at our
corporate headquarters located at 250 Williams Street, Suite E-100,
Atlanta, Georgia, at 10:00 a.m. local time. Stockholders are invited to
attend the annual meeting and are requested to vote upon the proposals
described in this Proxy Statement.
|
|
Q:
|
What
information is contained in these materials?
|
|
A:
|
The
information included in this Proxy Statement relates to the proposals to
be voted upon at the annual meeting, the voting process, the compensation
of our directors and named executive officers and certain other required
information. Our Annual Report to Stockholders for the year ended December
31, 2008, which includes our audited consolidated financial statements, is
included in these proxy materials. Your proxy, which you may use to vote,
is also enclosed.
|
|
Q:
|
What
proposals will be voted upon at the Annual Meeting?
|
|
A:
|
There
are three proposals scheduled to be voted upon at the annual
meeting:
|
|
●
|
election
of three directors for three-year terms expiring in
2012;
|
|
●
|
ratification
of the appointment of PricewaterhouseCoopers LLP as the independent
registered public accounting firm for our fiscal year ending December 31,
2009; and
|
|
●
|
consideration
of a stockholder proposal relating to our Rights
Agreement.
|
|
In
addition, such other business as may properly come before the meeting will
be considered and voted upon. We are not currently aware of any other
matters to be considered and voted upon at the meeting.
|
||
Q:
|
How
does Internap’s Board of Directors recommend that I
vote?
|
|
A:
|
Your
Board of Directors recommends that you vote your shares “FOR” each of the
nominees to the Board of Directors and “FOR” ratification of the
appointment of PricewaterhouseCoopers LLP as the independent registered
public accounting firm for our fiscal year ending December 31, 2009. Your
Board of Directors recommends that you vote your shares “AGAINST” the
stockholder proposal relating to our Rights
Agreement.
|
|
Q:
|
Who
may vote?
|
|
A:
|
You
may vote at the annual meeting or by proxy if you were a stockholder of
record at the close of business on April 24, 2009. Each stockholder is
entitled to one vote per share on each matter presented. As of April 24,
2009, there were 50,805,919 shares of our common
stock outstanding.
|
Q:
|
How
do I vote before the Annual Meeting?
|
A:
|
We
offer the convenience of voting by mail-in proxy, telephone or the
Internet as described in more detail below. See the enclosed proxy for
voting instructions. If you properly sign and return the proxy in the form
we have provided or properly vote by telephone or the Internet, your
shares will be voted at the annual meeting and at any adjournment of that
meeting.
|
Q:
|
What
if I return my proxy but do not provide voting
instructions?
|
A:
|
If
you specify a choice, your proxy will be voted as specified. If you return
a signed proxy but do not specify a choice, your shares will be voted in
favor of the election of all nominees named in this Proxy Statement, in
favor of the proposal to ratify PricewaterhouseCoopers LLP as the
independent registered public accounting firm for our fiscal year ending
December 31, 2009 and against the stockholder proposal relating to our
Rights Agreement. In all cases, your proxy will be voted in the discretion
of the individuals named as proxies on the proxy card with respect to any
other matters that may come before the annual meeting.
|
Q:
|
Can
I change my mind after I vote?
|
A:
|
You
may revoke your proxy at any time before it is exercised by delivering
written notice of revocation to the Secretary of Internap or by attending
and voting at the annual meeting.
|
Q:
|
How
can I vote my shares in person at the Annual Meeting?
|
A:
|
Shares
held directly in your name as the stockholder of record may be voted in
person at the annual meeting. If you choose to vote in person, please
bring the enclosed proxy card and proof of identification. Even if you
plan to attend the annual meeting in person, we recommend that you vote
your shares in advance as described below so that your vote will be
counted if you later decide not to attend the annual meeting. Shares held
in “street name” through a brokerage account or by a bank or other nominee
may be voted in person by you if you obtain a signed proxy from the record
holder giving you the right to vote the shares.
|
Q:
|
What
is the quorum requirement for the Annual Meeting?
|
A:
|
The
presence in person or by proxy of the holders of a majority of the shares
entitled to vote at the annual meeting is necessary to constitute a
quorum. In determining the presence or absence of a quorum for the annual
meeting, all shares for which a proxy or vote is received will be counted
as present and represented at the meeting, including abstentions and
shares represented by a broker vote on any matter.
|
Q:
|
What
is the voting requirement to approve each of the
proposals?
|
A:
|
A
plurality of the shares voting is required to elect directors. This means
that the nominees who receive the most votes will be elected. In counting
votes on the election of directors, only votes “for” or “withheld” affect
the outcome. Broker non-votes (which are explained below) will be counted
as not voted and will be deducted from the total shares of which a
plurality is required.
|
Each
other matter to be voted upon at the annual meeting will be approved if a
majority of the shares present or represented at the meeting and entitled
to vote upon the proposal are voted in favor of such matter. In counting
votes on each such matter, abstentions will be counted as voted against
the matter and broker non-votes will be counted as not voted upon the
matter and deducted from the total shares of which a majority is
required.
|
|
Q:
|
What
are broker non-votes and what effect do they have on the
proposals?
|
A:
|
Generally,
broker non-votes occur when shares held by a broker in “street name” for a
beneficial owner are not voted with respect to a particular proposal
because (a) the broker has not received voting instructions from the
beneficial owner and (b) the broker lacks discretionary voting power to
vote those shares.
|
If
you do not vote your proxy and your shares are held in street name, your
brokerage firm may either vote your shares on routine matters or leave
your shares unvoted. Under the rules of the NASDAQ Global Market, member
firms that hold shares in street name for beneficial owners may, to the
extent that such beneficial owners do not furnish voting instructions with
respect to any or all proposals submitted for stockholder action, vote on
the election of directors and on certain other routine matters. On
non-routine matters, if the brokerage firm has not received voting
instructions from the stockholder, the brokerage firm cannot vote the
shares on that proposal, which is considered a “broker non-vote.” Broker
non-votes will be counted for purposes of establishing a quorum to conduct
business at the meeting. The proposal for the election of directors and
the ratification of the appointment of our independent registered public
accounting firm are routine. The stockholder proposal relating to our
Rights Agreement is non-routine. Accordingly, brokers that do not receive
instructions will be entitled to vote on the election of directors and the
ratification of the appointment of our independent registered public
accounting firm at the annual meeting, but may not vote for the
stockholder proposal relating to our Rights
Agreement.
|
Q:
|
What
does it mean if I receive more than one proxy or voting instruction
card?
|
A:
|
It
means that your shares are registered differently or are in more than one
account. Please provide voting instructions for all proxy and voting
instruction cards you receive.
|
Q:
|
Where
can I find the voting results of the Annual Meeting?
|
A:
|
We
will announce preliminary voting results at the annual meeting and publish
final results in our quarterly report on Form 10-Q for the second quarter
of 2009.
|
Audit
Committee
|
Compensation
Committee
|
Nominations
and Governance
Committee
|
||
William
J. Harding
|
Charles
B. Coe (Committee Chair)
|
Charles
B. Coe
|
||
Patricia
L. Higgins (Committee Chair)
|
Patricia
L. Higgins
|
Eugene
Eidenberg
|
||
Kevin
L. Ober
|
Gary
M. Pfeiffer
|
Patricia
L. Higgins
|
||
Gary
M. Pfeiffer
|
Daniel
C. Stanzione
|
Daniel
C. Stanzione (Committee
Chair)
|
Audit
Committee
|
Compensation
Committee
|
Nominations
and Governance
Committee
|
||
Eugene
Eidenberg
|
Charles
B. Coe (Committee Chair)
|
Charles
B. Coe
|
||
William
J. Harding
|
Patricia
L. Higgins
|
Patricia
L. Higgins (Committee Chair)
|
||
Kevin
L. Ober
|
Daniel
C. Stanzione
|
Gary
M. Pfeiffer
|
||
Gary
M. Pfeiffer (Committee Chair)
|
Daniel
C.
Stanzione
|
●
|
appoints,
retains, compensates, oversees, evaluates and, if appropriate, terminates
our independent registered public accounting firm;
|
|
●
|
annually
reviews the performance, effectiveness, objectivity and independence of
our independent registered public accounting firm and our internal audit
function;
|
|
●
|
establishes
procedures for the receipt, retention and treatment of complaints
regarding accounting and auditing matters;
|
|
●
|
reviews
with our independent registered public accounting firm the scope and
results of their audit;
|
|
●
|
approves
all audit services and pre-approves all permissible non-audit services to
be performed by our independent registered public accounting
firm;
|
|
●
|
reviews
our policies and systems with respect to risk assessment and risk
management and discusses significant risks or exposures with management
and our independent registered public accounting firm;
|
|
●
|
oversees
the financial reporting process and discusses with management and our
independent registered public accounting firm the interim and annual
financial statements that we file with the Securities and Exchange
Commission (the “SEC”); and
|
|
●
|
reviews
and monitors our accounting principles, policies and financial and
accounting
controls.
|
●
|
assists
the Board of Directors in discharging its responsibilities relating to
executive compensation and fulfilling its responsibilities relating to our
compensation and benefit programs and policies;
|
|
●
|
oversees
the overall compensation structure, policies and programs, and assesses
whether the compensation structure establishes appropriate
incentives;
|
|
●
|
reviews
and approves corporate and personal goals and objectives relevant to Chief
Executive Officer compensation, evaluates the performance of the Chief
Executive Officer in light of these goals and objectives, and, together
with the other independent directors, approves the compensation of the
Chief Executive Officer based on the evaluation;
|
|
●
|
reviews
and approves the compensation of our executive officers, including bonuses
and equity compensation;
|
|
●
|
administers
and makes recommendations with respect to our stock option and other
equity-based incentive plans; and
|
|
●
|
reviews
and discusses with management our Compensation Discussion and Analysis and
related disclosures required by the rules of the SEC and recommends to the
Board of Directors whether such disclosures should be included in our
annual report and proxy
statement.
|
●
|
interviews
each potential director nominee and recommends, consistent with criteria
approved by the Board, suitable candidates for nomination or appointment
to the Board;
|
|
●
|
in
conjunction with the Board, establishes qualification standards for Board
and committee membership;
|
|
●
|
develops
and recommends to the Board an annual self-evaluation process for the
Board and its committees and oversees the evaluation
process;
|
|
●
|
establishes
and recommends director independence guidelines to the Board;
and
|
|
●
|
reviews
and reports on all matters generally relating to corporate
governance.
|
Common
Stock Beneficially Owned
|
|||||||||
Name
and Address of Beneficial Owner
|
Number of
Shares(1)
|
Percent
of Class
|
|||||||
Kornitzer Capital
Management, Inc.(2)
|
3,428,025 | 6.7 | % | ||||||
5420
West 61st
Place
|
|||||||||
Shawnee
Mission, Kansas 66205
|
|||||||||
Integral
Capital Management VII, LLC, Integral Capital
|
4,310,000 | 8.5 | % | ||||||
Management
VIII, LLC and ICP Absolute Return
|
|||||||||
Management, LLC(3)
|
|||||||||
3000
Sand Hill Road, Building 3, Suite 240
|
|||||||||
Menlo
Park, California 94025
|
|||||||||
J. Eric Cooney(4)
|
400,000 | * | |||||||
James P.
DeBlasio(5)
|
774,284 | 1.5 | % | ||||||
Charles
B. Coe
|
61,000 | * | |||||||
Eugene
Eidenberg(6)
|
250,156 | * | |||||||
William J.
Harding(7)
|
32,282 | * | |||||||
Patricia
L. Higgins
|
48,729 | * | |||||||
Kevin
L. Ober
|
31,000 | * | |||||||
Gary
M. Pfeiffer
|
20,000 | * | |||||||
Daniel
C. Stanzione
|
53,000 | * | |||||||
George
E. Kilguss III
|
237,700 | * | |||||||
Richard
P. Dobb
|
96,849 | * | |||||||
Timothy
P. Sullivan
|
128,022 | * | |||||||
Randal
R. Thompson
|
99,437 | * | |||||||
Philip N.
Kaplan(8)
|
329,321 | * | |||||||
Vincent
Molinaro(9)
|
33,430 | * | |||||||
All
directors and executive officers as a group (15 persons)
|
2,595,210 | 5.0 | % |
(1)
|
Includes
(a) shares that may be forfeited if the named executive officer does not
satisfy the vesting provisions of restricted stock and (b) shares that may
be acquired by the exercise of stock options granted under our stock
option plans within 60 days after March 27, 2009. The number of shares of
restricted stock and the number of shares subject to stock options
exercisable within 60 days after March 27, 2009 for each of the directors
and named executive officers is shown
below:
|
Name
|
Restricted
Stock
|
Options
|
Total
|
|||||||||
J.
Eric Cooney
|
300,000 | — | 300,000 | |||||||||
James
P. DeBlasio
|
— | 529,000 | 529,000 | |||||||||
Charles
B. Coe
|
4,167 | 41,000 | 45,167 | |||||||||
Eugene
Eidenberg
|
4,167 | 147,999 | 152,166 | |||||||||
William
J. Harding
|
2,500 | 5,000 | 7,500 | |||||||||
Patricia
L. Higgins
|
4,167 | 39,000 | 43,167 | |||||||||
Kevin
L. Ober
|
4,167 | 26,000 | 30,167 | |||||||||
Gary
M. Pfeiffer
|
10,833 | 5,000 | 15,833 | |||||||||
Daniel
C. Stanzione
|
6,667 | 39,000 | 45,667 | |||||||||
George
E. Kilguss III
|
237,700 | — | 237,700 | |||||||||
Richard
P. Dobb
|
87,297 | — | 87,297 | |||||||||
Timothy
P. Sullivan
|
106,144 | — | 106,144 | |||||||||
Randal
R. Thompson
|
77,892 | 2,437 | 80,329 | |||||||||
Philip
N. Kaplan
|
— | — | — | |||||||||
Vincent
Molinaro
|
— | — | — | |||||||||
Directors
and executive officers as a group
|
845,701 | 834,436 | 1,680,137 |
(2)
|
Based
on information set forth in Schedule 13G filed January 9, 2009. Kornitzer
reported that it had sole voting power over 3,428,025 shares of common
stock, sole dispositive power over 3,304,650 shares of common stock and
shared dispositive power over 123,375 shares of common
stock.
|
(3)
|
Based
on information set forth in Amendment No. 1 to Schedule 13G filed February
9, 2009. Integral Capital Management VII, LLC reported that it had shared
voting and dispositive power over 2,500,000 shares of common stock;
Integral Capital Management VIII, LLC reported that it had shared voting
and dispositive power over 1,400,000 shares of common stock; and ICP
Absolute Return Management, LLC reported that it had shared voting and
dispositive power over 410,000 shares of common stock.
|
(4)
|
Mr.
Cooney became our President and Chief Executive Officer on March 16,
2009.
|
(5)
|
Mr.
DeBlasio resigned as our President and Chief Executive Officer on
March 15, 2009. In connection with the termination of his employment, all
outstanding shares of restricted stock and options to purchase common
stock became immediately vested as of his termination
date.
|
(6)
|
Includes
236 shares of common stock held by Dr. Eidenberg; 45,556 shares of common
stock held by Dr. Eidenberg, as trustee of the Eugene Eidenberg Trust
dated 9/97; 2,799 shares of common stock held by Eugene Eidenberg, as
trustee of the Anna M. Chavez Educational Trust; 40,000 shares of common
stock held by the Eugene Eidenberg Grantor Retained Annuity Trust and
8,566 shares held by Anna M. Chavez.
|
(7)
|
Dr.
Harding retired from Morgan Stanley Venture Partners III, LLC and Morgan
Stanley & Co., Inc. in 2007. At that time, Dr. Harding assigned all of
his equity compensation received while serving on our Board of Directors
to Morgan Stanley, which consisted of 2,500 shares of restricted common
stock and options to purchase 27,000 shares of common stock that are
vested and exercisable. Dr. Harding disclaims beneficial ownership in all
such shares. Because Dr. Harding has retired from Morgan Stanley, such
shares are excluded from the table above.
|
(8)
|
Mr.
Kaplan resigned his position as Chief Strategy Officer in June 2008. The
number of shares reported in the table above is based on the latest
information available to us which may not reflect the current holdings of
Mr. Kaplan.
|
(9)
|
Mr.
Molinaro resigned his position as Chief Operating Officer in June 2008.
The number of shares reported in the table above is based on the latest
information available to us which may not reflect the current holdings of
Mr.
Molinaro.
|
Name
|
Age
|
Position
|
||
J.
Eric Cooney
|
43
|
President
and Chief Executive Officer
|
||
George
E. Kilguss III
|
48
|
Vice
President and Chief Financial Officer
|
||
Richard
P. Dobb
|
55
|
Chief
Administrative Officer
|
||
Timothy
P. Sullivan
|
67
|
Chief
Technology Officer
|
||
Randal
R. Thompson
|
41
|
Vice President, Global Sales |
●
|
making
it more difficult to assess future market conditions and set appropriate
performance targets;
|
|
●
|
making
it more difficult for our named executive officers and our company to
achieve their respective performance targets; and
|
|
●
|
contributing
to reductions in our stock price, which in turn may adversely affect the
value of equity compensation.
|
●
|
the
2008 Confidential Radford Executive Compensation Survey,
Telecommunications Products/Services with revenues from $200 million to $1
billion;
|
|
●
|
the
2007 William M. Mercer Executive Compensation Report, All Organizations
with revenues less than $1 billion; and
|
|
●
|
the
2007 Watson Wyatt Industry Report on Top Management Compensation, All
Organizations with revenues from $150 million to $750
million.
|
●
|
base
salary;
|
|
●
|
annual
cash incentives; and
|
|
●
|
long-term
equity incentives, consisting of stock options and restricted
stock.
|
Name |
Base
Salary
|
|||
James P.
DeBlasio(1)
|
$ | 460,000 | ||
George E. Kilguss
III(2)
|
275,000 | |||
Richard P. Dobb(3)
|
272,800 | |||
Timothy P.
Sullivan(4)
|
275,000 | |||
Randal
R. Thompson
|
200,000 | |||
Philip N.
Kaplan(5)
|
244,000 | |||
Vincent
Molinaro(6)
|
360,000 |
(1)
|
Mr.
DeBlasio resigned as our President and Chief Executive Officer as of
March 15, 2009.
|
|
(2)
|
Mr.
Kilguss became our Chief Financial Officer in April
2008.
|
|
(3)
|
Mr.
Dobb received an increase of his base salary from $248,000 to $272,800 in
June 2008 for his promotion to Chief Administrative
Officer.
|
|
(4)
|
Mr.
Sullivan received an increase of his base salary to from $250,000 to
$275,000 in March 2008 in recognition of additional responsibilities
assumed in his role as Chief Technology Officer.
|
|
(5)
|
Mr.
Kaplan resigned as our Chief Strategy Officer in June
2008.
|
|
(6)
|
Mr.
Molinaro resigned as our Chief Operating Officer in June
2008.
|
●
|
focus
participants’ actions on the achievement of corporate annual revenue
growth and profitability goals;
|
|
●
|
align
participant’s actions to accomplish key corporate operational and
strategic goals;
|
|
●
|
encourage
and reward participants for the achievement of specific individual
objectives; and
|
|
●
|
maintain
a competitive range of incentive compensation
opportunities.
|
●
|
achievement
of corporate revenue goals, which comprised 25% of the potential
award;
|
|
●
|
achievement
of corporate adjusted EBITDA goals, which comprised 50% of the potential
award; and
|
|
●
|
achievement
of individual goals by the named executive officer, which comprised 25% of
the potential award.
|
Name
|
Target
|
Maximum
|
||||||
James P. DeBlasio
(1)
|
70 | % | 140 | % | ||||
George E. Kilguss
III (2)
|
50 | % | 100 | % | ||||
Richard
P. Dobb
|
50 | % | 100 | % | ||||
Timothy
P. Sullivan
|
50 | % | 100 | % | ||||
Randal
R. Thompson
|
45 | % | 90 | % | ||||
Philip N. Kaplan
(3)
|
37 | % | 74 | % | ||||
Vincent Molinaro
(4)
|
50 | % | 100 | % |
(1)
|
Mr.
DeBlasio resigned as our President and Chief Executive Officer as of March
15, 2009.
|
|
(2)
|
Mr.
Kilguss became our Chief Financial Officer in
April 2008.
|
|
(3)
|
Mr.
Kaplan resigned as our Chief Strategy Officer in June
2008.
|
|
(4)
|
Mr.
Molinaro resigned as our Chief Operating Officer in June
2008.
|
Weight
|
Threshold
|
Target
|
Above
|
Maximum
|
||||||||||||||||
Annual
Revenue Bonus
|
25 | % | 95 | % | 100 | % | 105 | % | 110 | % | ||||||||||
Payout
|
$ | 10,800 | $ | 27,000 | $ | 35,100 | $ | 54,000 | ||||||||||||
Annual
Adjusted EBITDA
Bonus
|
50 | % | 90 | % | 100 | % | 110 | % | 120 | % | ||||||||||
Payout
|
$ | 21,600 | $ | 54,000 | $ | 70,200 | $ | 108,000 | ||||||||||||
|
||||||||||||||||||||
Individual
Goals Bonus
|
25 | % |
Needs
Improvement
|
Meets
Expectations
|
Often
Exceeds
Expectations
|
Exceeds
Expectations
|
||||||||||||||
Payout
|
$ | 0 | $ | 27,000 | $ | 35,100 | $ | 54,000 |
●
|
focus
participants’ actions on the achievement of corporate annual revenue
growth and profitability goals;
|
|
●
|
align
participants’ actions to accomplish key corporate operational and
strategic goals;
|
|
●
|
encourage
and reward participants for the achievement of specific individual
objectives; and
|
|
●
|
maintain
a competitive range of incentive compensation
opportunities.
|
●
|
achievement
of corporate targets, including revenue, EBITDA and free cash flow, which
is EBITDA less capital expenditures, which collectively will comprise 70%
of the potential award; and
|
|
●
|
achievement
of individual goals by the named executive officer, which will comprise
30% of the potential
award.
|
Name
|
Target
|
Maximum
|
|||||||
James P. DeBlasio
(1)
|
70
|
%
|
140
|
%
|
|||||
George
E. Kilguss III
|
50
|
%
|
100
|
%
|
|||||
Richard
P. Dobb
|
50
|
%
|
100
|
%
|
|||||
Timothy
P. Sullivan
|
50
|
%
|
100
|
%
|
|||||
Randal
R. Thompson
|
50
|
%
|
100
|
%
|
|||||
J. Eric Cooney(2)
|
100
|
%
|
200
|
%
|
(1)
|
Mr.
DeBlasio resigned as our President and Chief Executive Officer as of March
15, 2009.
|
(2)
|
Mr.
Cooney became our President and Chief Executive Officer as of March 16,
2009.
|
●
|
split
the value of the grant of equity awards between restricted stock grants
and stock option grants;
|
|
●
|
modify
the vesting of subsequent restricted stock awards to be based 100% on
time-based vesting;
|
|
●
|
discontinue
the use of the prior formula based approach for determining equity award
amounts in favor of benchmarking award values based on the results of
Aon’s competitive market survey discussed above;
|
|
●
|
grant
stock options with vesting of 25% on the first anniversary of the grant
date and 36 equal monthly installments thereafter; and
|
|
●
|
grant
restricted stock with vesting of 25% in four annual
installments.
|
Restricted
Stock
|
Stock
Options
|
||||||||
Name
|
|
(#)
|
(#)
|
||||||
J.
Eric Cooney
|
300,000
|
(1)
|
600,000
|
||||||
George
E. Kilguss III
|
37,700
|
67,900
|
|||||||
Richard
P. Dobb
|
37,400
|
67,400
|
|||||||
Timothy
P. Sullivan
|
37,700
|
67,900
|
|||||||
Randal
R. Thompson
|
23,300
|
41,900
|
(1) In addition, Mr. Cooney will be granted 200,000 shares of restricted stock on each of the first anniversary and the second anniversary of Mr. Cooney’s commencement of employment. |
Position
|
|
Retention
Ratio
|
Time
to Retain
From
Date of
Acquisition
|
||
Chief
Executive Officer
|
50.0%
|
Five
Years
|
|||
Chief
Financial Officer
|
33.3%
|
Four
Years
|
|||
Chief
Administrative Officer
|
33.3%
|
Four
Years
|
|||
Chief
Technology Officer
|
33.0%
|
Four
Years
|
|||
Vice
President Global Sales
|
33.0%
|
Four
Years
|
Name
and Principal
Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive
Plan
Compensation
|
All
Other
Compensation
|
Total
|
||||||||||||||||||||||||
($)
|
($)(1)
|
($)(2)
|
($)(2)
|
($)(1)(3)
|
($)(4)
|
($)
|
||||||||||||||||||||||||||
James
P. DeBlasio
former
President
and Chief
Executive
Officer
|
2008 | 460,000 | — | 813,470 | 436,645 | — | 114,618 | 1,824,733 | ||||||||||||||||||||||||
2007 | 425,000 | — | 524,831 | 435,452 | 337,663 | 27,462 | 1,750,408 | |||||||||||||||||||||||||
2006
|
350,000 | — | 119,918 | 435,452 | — | 47,599 | 952,969 | |||||||||||||||||||||||||
George
E. Kilguss III
Vice
President
and Chief
Financial Officer
(5)
|
2008
|
202,196 | — | 163,901 | — | — | 91,837 | 457,934 | ||||||||||||||||||||||||
2007
|
— | — | — | — | — | — | — | |||||||||||||||||||||||||
2006
|
— | — | — | — | — | — | — | |||||||||||||||||||||||||
Richard
P. Dobb
Chief
Administrative
Officer
(6)
|
2008
|
260,400 | — | 163,850 | — | — | 6,954 | 431,204 | ||||||||||||||||||||||||
2007
|
180,000 | — | 78,783 | — | 122,580 | 4,554 | 385,917 | |||||||||||||||||||||||||
2006
|
— | — | — | — | — | — | — | |||||||||||||||||||||||||
Timothy
P. Sullivan
Chief
Technology
Officer
(7)
|
2008
|
269,792 | — | 218,320 | — | — | 25,193 | 513,305 | ||||||||||||||||||||||||
2007
|
180,000 | — | 78,783 | — | — | 54 | 258,837 | |||||||||||||||||||||||||
2006
|
— | — | 29,978 | — | — | — | 29,978 | |||||||||||||||||||||||||
Randal
R. Thompson
Vice
President
Global
Sales
|
2008
|
200,000 | — | 186,418 | 9,487 | — | 4,479 | 400,384 | ||||||||||||||||||||||||
2007
|
167,010 | 30,000 | 50,166 | 10,253 | 125,000 | 197,487 | 579,916 | |||||||||||||||||||||||||
2006
|
141,458 | 18,890 | 14,903 | 24,430 | — | 103,961 | 303,642 | |||||||||||||||||||||||||
Philip
N. Kaplan
former
Chief
Strategy
Officer
(8)
|
2008
|
129,693 | — | 28,979 | 78,315 | — | 3,409 | 240,396 | ||||||||||||||||||||||||
2007
|
230,808 | — | — | 396,641 | 98,688 | 5,048 | 731,185 | |||||||||||||||||||||||||
2006
|
148,750 | 120,000 | — | — | — | — | 268,750 | |||||||||||||||||||||||||
Vincent
Molinaro
former
Chief
Operating
Officer
(9)
|
2008
|
180,000 | 6,667 | 543,393 | — | — | 183,888 | 913,948 | ||||||||||||||||||||||||
2007
|
247,917 | 13,333 | 325,086 | — | 75,000 | 3,180 | 664,516 | |||||||||||||||||||||||||
2006
|
— | — | — | — | — | — | — |
(1)
|
Includes
amounts earned because of achievement of personal performance
goals.
|
(2)
|
Represents
the proportionate amount of the total fair value of stock and option
awards that we recognized as an expense in fiscal 2008, 2007 and 2006 for
financial accounting purposes, excluding forfeitures related to
service-based vesting conditions. We determined the fair values of these
awards and the amounts expensed in accordance with SFAS 123R. The awards
for which expense is shown in this table include the awards described in
the Grants of Plan-Based Awards table of this Proxy Statement, as well as
awards granted in prior years for which we continued to recognize expense
in fiscal 2008, 2007 and 2006. The assumptions used in determining the
grant date fair values of these awards are set forth in the notes to our
consolidated financial statements, which are included in our Annual Report
on Form 10-K for the year ended December 31, 2008.
|
(3)
|
As
provided in the 2008 Bonus Plan, the Compensation Committee determined and
approved bonus payments in 2008 for performance in 2007 in excess of the
targets established in the 2008 Bonus Plan for each named executive
officer, other than the Chief Executive Officer, and the Board of
Directors determined the bonus payment for the Chief Executive Officer,
and paid such excess in shares of common stock on March 15, 2008. Mr.
DeBlasio’s bonus consisted of $297,500 paid in cash and $40,163 paid in
shares of common stock. Mr. Dobb’s bonus consisted of $108,000 paid in
cash and $14,180 paid in shares of common stock. Mr. Thompson’s bonus
consisted of $125,000 paid in cash. Mr. Kaplan’s bonus consisted of
$87,000 paid in cash and $11,688 paid in shares of common stock. The
amounts reported in this column include the value of such shares. The
value of these shares is not, however, reflected in the “Stock Awards”
column.
|
(4)
|
The
compensation listed in this column for 2008 includes: (a) our matching
contributions to the accounts of the named executive officers under our
401(k) savings plan as follows: $6,900 for Mr. DeBlasio; $4,375 for Mr.
Kilguss; $6,900 for Mr. Dobb; $0 for Mr. Sullivan; $4,003 for Mr.
Thompson; $3,355 for Mr. Kaplan and $3,833 for Mr. Molinaro; and (b)
payments made by us for premiums on certain life insurance policies in the
amount of $54 for each of the named executive officers. The compensation
listed in this column for Mr. DeBlasio also includes $35,550 for corporate
housing, $16,168 for the use of a company-provided automobile and a gross
up of $55,946 for the payment of estimated taxes on taxable reimbursements
made to Mr. DeBlasio. The compensation listed in this column for Mr.
Kilguss also includes a gross up of $23,107 for the payment of taxes
related to relocation expenses and $64,302 in relocation expenses. The
compensation listed in this column for Mr. Sullivan also includes a gross
up of $25,139 for the payment of estimated taxes on taxable reimbursements
made to Mr. Sullivan. The compensation listed in this column for Mr.
Thompson also includes a sales bonus of $422. The compensation listed in
this column for Mr. Molinaro includes a severance payment of $180,000
related to his termination of employment.
|
(5)
|
Mr.
Kilguss’ employment began in April 2008.
|
(6)
|
Mr.
Dobb’s employment began in April 2007.
|
(7)
|
Mr.
Sullivan’s employment began in November 2006.
|
(8)
|
Mr.
Kaplan resigned as our Chief Strategy Officer in June
2008.
|
(9)
|
Mr.
Molinaro resigned as our Chief Operating Officer in June
2008.
|
Name
and Principal
|
Grant
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan Awards(1)
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or
Units
|
Grant
Date
Fair
Value
of
Stock
and
Option
Awards
|
|||||||||||
Threshold
|
Target
|
Maximum
|
|||||||||||||
Position
|
Date
|
($)
|
($)
|
($)
|
(#)
|
($)
|
|||||||||
James
P. DeBlasio
|
3/15/2008
|
(2)
|
—
|
—
|
—
|
6,638
|
40,160
|
||||||||
former
President and Chief Executive Officer
|
3/20/2008
|
128,800
|
322,000
|
644,000
|
149,776
|
536,950
|
|||||||||
George
E. Kilguss III
|
4/30/2008
|
55,000
|
137,500
|
275,000
|
200,000
|
962,000
|
|||||||||
Chief
Financial Officer
|
|||||||||||||||
Richard
P. Dobb
|
3/15/2008
|
(2)
|
—
|
—
|
—
|
2,409
|
14,574
|
||||||||
Chief
Administrative Officer
|
3/20/2008
|
41,545
|
103,863
|
207,727
|
34,606
|
124,066
|
|||||||||
Timothy
P. Sullivan
|
3/15/2008
|
(2)
|
55,000
|
137,500
|
275,000
|
5,220
|
31,581
|
||||||||
Chief
Technology Officer
|
3/20/2008
|
—
|
—
|
—
|
53,298
|
191,078
|
|||||||||
Randal
R. Thompson
|
3/20/2008
|
36,000
|
90,000
|
180,000
|
27,908
|
100,052
|
|||||||||
Vice
President Global Sales
|
|||||||||||||||
Philip
N. Kaplan
|
3/15/2008
|
(2)
|
—
|
—
|
—
|
1,931
|
11,683
|
||||||||
former
Chief Strategy Officer
|
3/20/2008
|
43,920
|
109,803
|
219,600
|
34,048
|
122,065
|
|||||||||
Vincent
Molinaro
|
3/20/2008
|
70,000
|
175,000
|
350,000
|
69,772
|
250,136
|
|||||||||
former
Chief Operating Officer
|
(1)
|
In
2008, our revenue and adjusted EBITDA were less than the thresholds
established in the 2008 Bonus Plan. Because we did not achieve either the
revenue or EBITDA target, we did not pay bonuses to the named executive
officers or other employees based on 2008 performance.
|
(2)
|
As
permitted by the Stock Plan, the Compensation Committee determined and
approved bonus payments in 2008 for performance in 2007 in excess of the
targets established in the Stock Plan for each named executive officer,
other than the Chief Executive Officer, and the Board of Directors
determined the bonus payment for the Chief Executive Officer, and paid
such excess in shares of our common stock on March 15, 2008. Mr.
DeBlasio’s bonus consisted of $297,500 paid in cash and $40,163 paid in
shares of common stock, or 6,638 shares. Mr. Dobb’s bonus consisted of
$108,000 paid in cash and $14,180 paid in shares of common stock, or 2,409
shares. Mr. Kaplan’s bonus consisted of $87,000 paid in cash and $11,688
paid in shares of common stock, or 1,931
shares.
|
Stock
Awards
|
|||||||||||||||
Number
of Shares or Units of Stock That Have Not Vested |
Market
Value of Shares or Units of Stock That Have Not Vested(1) |
||||||||||||||
Option
Awards
|
|||||||||||||||
Name
and Principal
Position
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
|
Option
Expiration
Date
|
|||||||||||
($)
|
(#)
|
($)
|
|||||||||||||
James
P. DeBlasio
|
25,000
|
(2)
|
—
|
13.50
|
9/16/2013
|
86,972
|
(3)
|
217,430
|
|||||||
former
Chief Executive
Officer and
President
|
2,000
|
—
|
14.90
|
5/27/2014
|
135,734
|
(4) |
339,335
|
||||||||
|
2,000
|
—
|
4.60
|
6/23/2015
|
—
|
—
|
|||||||||
|
406,250
|
93,750
|
4.80
|
9/30/2015
|
—
|
—
|
|||||||||
George
E. Killgus III
|
—
|
—
|
—
|
—
|
200,000
|
500,000
|
|||||||||
Chief
Financial Officer
|
|||||||||||||||
Richard
P. Dobb
|
—
|
—
|
—
|
—
|
22,500
|
(5)
|
56,250
|
||||||||
Chief
Administrative Officer
|
—
|
—
|
—
|
—
|
31,362
|
78,405
|
|||||||||
|
|||||||||||||||
Timothy
P. Sullivan
|
—
|
—
|
—
|
—
|
26,250
|
65,625
|
|||||||||
Chief
Technology
Officer
|
—
|
—
|
—
|
—
|
48,301
|
120,753
|
|||||||||
|
|||||||||||||||
Randal
R. Thompson
|
458
|
271
|
5.30
|
1/18/2016
|
3,750
|
9,375
|
|||||||||
Vice
President Global
Sales
|
1,625
|
562
|
14.46
|
9/28/2016
|
2,812
|
7,030
|
|||||||||
|
—
|
—
|
—
|
—
|
30,000
|
75,000
|
|||||||||
|
—
|
—
|
—
|
—
|
25,292
|
63,230
|
|||||||||
Philip
N. Kaplan
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||
former
Chief Strategy
Officer
(6)
|
|||||||||||||||
Vincent
Molinaro
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||
former
Chief Operating
Officer
(7)
|
(1)
|
The
fair market value of a share of our common stock on December 31, 2008 was
$2.50.
|
(2)
|
Mr.
DeBlasio was granted 500,000 options on September 30, 2005. Of the total
award, 25% vested immediately, but were not exercisable until September
30, 2006 with the remaining shares vesting annually over a four-year
period beginning September 30, 2005, and the other options were granted
for Mr. DeBlasio’s service as a director. All of Mr. DeBlasio’s
outstanding equity awards vested as of March 15, 2009 in connection with
his termination of employment.
|
(3)
|
Mr.
DeBlasio was awarded shares of restricted stock on September 30, 2005. Of
the total award, 50% of those shares vested on September 30, 2006, with
the remaining shares vesting annually over a three-year period beginning
September 30, 2006. All of Mr. DeBlasio’s outstanding equity awards vested
as of March 15, 2009 in connection with his termination of
employment.
|
(4)
|
Mr.
DeBlasio was granted 125,000 shares of restricted stock on March 15, 2007
that vested in a series of 16 quarterly installments at the end of each
calendar quarter beginning with the second quarter of 2007. All of Mr.
DeBlasio’s outstanding equity awards vested as of March 15, 2009 in
connection with his termination of employment.
|
(5)
|
Mr.
Dobb was granted 30,000 shares of restricted stock on April 23, 2007 with
25% of the award vesting on each anniversary of grant.
|
(6)
|
Mr.
Kaplan resigned as our Chief Strategy Officer in June
2008.
|
(7)
|
Mr.
Molinaro resigned as our Chief Operating Officer in June
2008.
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||
Name
and Principal Position
|
Number
of Shares
Acquired
on
Exercise
(#)
|
Value
Realized
Upon
Exercise
($)
|
Number
of Shares
Acquired
on
Vesting
(#)
|
Value
Realized
On
Vesting
($)
|
||||||||||||
James
P. DeBlasio
former
Chief
Executive Officer
|
— | — | 68,600 | 274,468 | ||||||||||||
George
E. Kilguss III
Chief Financial Officer |
— | — | — | — | ||||||||||||
Richard
P. Dobb
Chief Administrative Officer |
— | — | 13,153 | 64,574 | ||||||||||||
Timothy
P. Sullivan
Chief Technology Officer |
— | — | 18,967 | 92,311 | ||||||||||||
Randal
R. Thompson
Vice President Global Sales |
— | — | 16,367 | 76,572 | ||||||||||||
Philip
N. Kaplan
former
Chief
Strategy Officer
|
25,659 | 126,242 | 1,931 | 11,683 | ||||||||||||
Vincent
Molinaro
former
Chief
Operating Officer
|
— | — | 33,430 | 152,397 |
Name
|
|
Fees
Earned or Paid
in
Cash
($)
|
Stock
Awards
($)(1)(2)(3)
|
Option
Awards
($)(1)(2)(3)
|
Total
($)
|
||||||||||||
Eugene
Eidenberg, Chairman
|
61,250 | 13,779 | 15,506 | 90,535 | |||||||||||||
Charles
B. Coe
|
50,500 | 19,753 | 15,506 | 85,759 | |||||||||||||
William
J. Harding
|
45,500 | 2,392 | 15,506 | 63,398 | |||||||||||||
Patricia
L. Higgins
|
63,250 | 19,753 | 15,506 | 98,509 | |||||||||||||
Kevin
L. Ober
|
49,250 | 19,753 | 15,506 | 84,509 | |||||||||||||
Gary
M. Pfeiffer
|
55,750 | 64,129 | 15,506 | 135,385 | |||||||||||||
Daniel
C. Stanzione
|
54,250 | 13,779 | 15,506 | 83,535 |
(1)
|
The
amounts reported reflect the aggregate dollar amounts recognized for stock
awards and option awards, respectively, for financial statement reporting
purposes with respect to fiscal 2008 (disregarding any estimate of
forfeitures related to service-based vesting conditions). For a discussion
of the assumptions and methodologies used to calculate the amounts
reported in these columns, please see the discussion of stock and option
awards contained in our consolidated financial statements, which are
included in our Annual Report on Form 10-K for the year ended December 31,
2008.
|
(2)
|
The
grant date fair value of each equity award computed in accordance with
SFAS 123(R) is the same as the amount recognized by us for financial
statement reporting purposes in accordance with SFAS 123(R). For valuation
assumptions, see our consolidated financial statements, which are included
in our Annual Report on Form 10-K for the year ended December 31,
2008.
|
(3)
|
The
following table lists the number of outstanding stock options and
restricted stock awards held by our non-employee directors as of December
31, 2008. All outstanding options are fully
vested:
|
Name
|
Options
|
Restricted
Stock
|
|||||||
Eugene
Eidenberg
|
147,999 | 4,167 | |||||||
Charles
B. Coe
|
41,000 | 4,167 | |||||||
William J.
Harding(a)
|
5,000 | 2,500 | |||||||
Patricia
L. Higgins
|
39,000 | 4,167 | |||||||
Kevin
L. Ober
|
26,000 | 4,167 | |||||||
Gary
M. Pfeiffer
|
5,000 | 10,833 | |||||||
Daniel
C. Stanzione
|
39,000 | 4,167 |
(a)
|
Dr.
Harding retired from Morgan Stanley Venture Partners III, LLC and Morgan
Stanley & Co., Inc. in October of 2007. He assigned all of his equity
compensation received while serving on our Board of Directors to Morgan
Stanley, which consisted of 2,500 shares of restricted common stock and
options to purchase 27,000 shares of common stock that are vested and
exercisable. Dr. Harding disclaims beneficial ownership in all such
shares. Because Dr. Harding has retired from Morgan Stanley, such shares
are excluded from the table
above.
|
The
Compensation Committee
|
|
Charles
B. Coe, Chairman
|
|
Patricia
L. Higgins
|
|
Gary
M. Pfeiffer
|
|
Daniel
C. Stanzione
|
Audit
Committee
|
|
Patricia
L. Higgins, Chairman
William
J. Harding
Kevin
L. Ober
Gary
M. Pfeiffer
|
2008
|
2007
|
|||||||
Audit Fees(1)
|
$ | 2,250,926 | $ | 1,988,994 | ||||
Audit-Related
Fees(2)
|
578,049 | 325,694 | ||||||
Tax Fees(3)
|
42,265 | 78,530 | ||||||
All Other Fees(4)
|
1,500 | 1,500 | ||||||
Total
|
$ | 2,872,740 | $ | 2,394,718 |
(1)
|
Fees
related to the audit of our annual financial statements, including the
audit of the effectiveness of internal control over financial reporting
and the reviews of the quarterly financial statements filed on Forms
10-Q.
|
(2)
|
Fees
primarily related to international statutory filings.
|
(3)
|
Fees
primarily related to tax compliance, advice and
planning.
|
(4)
|
Fees
related to the renewal of our accounting research
software.
|
●
|
encourage
potential acquirors to negotiate with our Board of Directors before
attempting an acquisition;
|
|
●
|
provide
our Board of Directors with adequate time to evaluate an acquisition
offer;
|
●
|
strengthen
our Board of Director’s position to negotiate the most attractive
acquisition offer possible for the benefit of our stockholders; and
|
|
●
|
provide
our Board of Directors with the opportunity to develop alternatives that
may maximize stockholder value, preserve our long-term value and ensure
that all stockholders are treated
fairly.
|