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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant þ
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission only
(as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Section 240.14a-12 |
PLANTRONICS, INC.
(Name of Registrant as Specified in its Charter)
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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. |
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Date Filed: |
Ken Kannappan
President and Chief Executive Officer
June 16, 2006
Dear Fellow Stockholders:
Sound innovation what does it mean? At Plantronics,
we have a commitment to enrich life through the provision of
clear sound that has been evident for 45 years
first in lightweight communications headsets, then in telephones
for the hearing impaired and most recently in the convergence of
audio communications and entertainment. During the past year,
our growth in stylish wireless headsets with crystal clear sound
continued. Plantronics is ready for the coming trend of
combining MP3 players and cell phones with new products of ours
that will enhance the users experience like never before.
We are also building the infrastructure that will enable us to
succeed for years to come. Some of the pillars that we put in
place this year include: growing revenues to $750 million
in fiscal 2006 from $560 million in fiscal 2005
a growth rate of 34%; continued profitability and strong cash
flow; the successful launch of a number of new wireless
products; the construction and launch of our new manufacturing
and development facility in Suzhou, China; the launch of a major
U.S. marketing campaign and the acquisition of Altec
Lansing and Octiv (now Volume Logic.)
Our primary goal is to increase stockholder value over the long
term. While our profitability did not meet our expectations in
fiscal 2006, we believe that we are well positioned to continue
to enact our strategic plan in fiscal 2007 to increase revenues
and improve profitability. To achieve these objectives, we must
be able to attract and retain superior talent in an increasingly
competitive environment. At the same time, we are trying to
balance our need for excellent people against the cost to
stockholders of equity incentive programs. The fungible share
program that we are proposing in this proxy statement once again
attempts to effectively walk the line of attracting and
retaining critical personnel and enhancing stockholder value.
We request your approval of five key proposals at our Annual
Meeting. First, we seek the election of seven members to our
Board of Directors. Second, we seek ratification and approval of
the amendment of the 2003 Stock Plan, which includes an increase
of 1.8 million shares in the common stock issuable
thereunder. Third, we seek ratification and approval of an
increase of 200,000 shares in the common stock issuable
under the 2002 Employee Stock Purchase Plan. Fourth, we seek
ratification and approval of the Performance Bonus Plan.
Finally, we ask that you ratify the appointment of
PricewaterhouseCoopers LLP as our independent registered public
accounting firm for fiscal 2007.
Each of the proposals is discussed in greater detail in the
following Proxy Statement. Thank you for your support of
Plantronics.
Ken Kannappan
Proxy Statement
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held July 26, 2006
To the Stockholders:
Our 2006 Annual Meeting of Stockholders will be held on
Wednesday, July 26, 2006 at 10:00 a.m., PDT, at the
Plantronics, Inc. Headquarters at 345 Encinal Street, Santa
Cruz, California 95060. Our Board of Directors is soliciting
proxies for the Annual Meeting. This Proxy Statement contains
important information for you to consider when deciding how to
vote on the matters brought before the Annual Meeting. We ask
that you please read it carefully.
The purpose of the Annual Meeting is to:
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Elect seven (7) Directors to serve until the next Annual
Meeting or until their successors are duly elected and qualified. |
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Ratify and approve the amendment of the 2003 Stock Plan, which
includes an increase of 1.8 million shares in the common
stock issuable thereunder. |
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Ratify and approve an increase of 200,000 shares in the
Common Stock issuable under the 2002 Employee Stock Purchase
Plan. |
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Ratify and approve the Performance Bonus Plan. |
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Ratify the appointment of PricewaterhouseCoopers LLP as the
independent registered public accounting firm of Plantronics for
fiscal 2007. |
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Transact such other business as may properly come before the
Annual Meeting or any adjournment thereof. |
The foregoing items of business are more fully described in the
Proxy Statement accompanying this Notice.
Only Plantronics stockholders of record at the close of business
on June 1, 2006 are entitled to vote at the Annual Meeting.
To assure your representation at the Annual Meeting, you are
urged to mark, sign, date and return the enclosed proxy card as
promptly as possible. We enclose a postage-prepaid envelope for
that purpose. You may also cast your vote by telephone or over
the Internet as instructed on the enclosed proxy card. Any
stockholder of record attending the Annual Meeting may vote in
person, even if she or he has returned a proxy, or voted by
telephone or over the Internet.
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BY ORDER OF THE BOARD OF DIRECTORS |
Rich Pickard
Secretary
Santa Cruz, California
June 13, 2006
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE
REQUESTED TO VOTE YOUR SHARES AS PROMPTLY AS POSSIBLE. PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN
THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES. ALTERNATIVELY, YOU MAY VOTE OVER THE INTERNET
OR BY TELEPHONE, AS INSTRUCTED ON THE PROXY CARD.
TABLE OF CONTENTS
PROXY STATEMENT
FOR 2006 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
Your vote is very important. Our Board of Directors is
soliciting proxies for the 2006 Annual Meeting of Stockholders.
This Proxy Statement contains important information for you to
consider when deciding how to vote on the matters brought before
the Annual Meeting. Please read it carefully.
This Proxy Statement, the form of proxy and the 2006 Annual
Report to Stockholders will be mailed to stockholders of record
at the close of business on June 1, 2006, on or about
June 16, 2006. The Annual Report is not a part of this
Proxy Statement. Our principal executive offices are located at
345 Encinal Street, Santa Cruz, California. Our telephone number
at that location is (800) 544-4660.
The Annual Meeting will be held at 10:00 a.m. PDT on
July 26, 2006 at the Plantronics, Inc. Headquarters at 345
Encinal Street, Santa Cruz, California 95060. Please follow the
instructions provided on the Proxy Card or via our telephone or
internet voting services to indicate if you plan to attend the
Annual Meeting in person.
Plantronics will pay the costs of soliciting proxies from
stockholders. We have engaged The Proxy Advisory Group to assist
us in the solicitation of proxies from brokers, bank nominees
and other institutional owners, for a fee of $7,500, plus
customary disbursements. We may also reimburse brokerage firms
and other persons representing beneficial owners of shares for
their expenses in forwarding the voting materials to the
beneficial owners. Directors, officers and regular employees may
solicit proxies on behalf of Plantronics, without additional
compensation, personally or by telephone.
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS
AND THE ANNUAL MEETING
Who Can Vote?
The Board of Directors set June 1, 2006 as the record date
for the Annual Meeting. All stockholders of record who owned
Plantronics common stock at the close of business on
June 1, 2006 may attend and vote at the Annual Meeting or
any adjournments thereof. Each stockholder is entitled to one
vote for each share of common stock held on all matters to be
voted on. At the close of business on the record date, there
were 47,446,749 shares of common stock outstanding.
How Many Votes Are Required to Hold the Annual
Meeting?
The required quorum for the transaction of business at the
Annual Meeting is a majority of shares of common stock issued
and outstanding on the record date. Shares that are voted
FOR, AGAINST or ABSTAIN are
treated as being present at the meeting for purposes of
establishing a quorum and are also treated as shares entitled to
vote at the Annual Meeting (the
Votes Cast) with respect to such matter.
How Are Abstentions and Broker Non-Votes Treated?
While there is no definitive statutory or case law authority in
Delaware as to the proper treatment of abstentions, the Company
believes that abstentions should be counted for purposes of
determining both (i) the presence or absence of a quorum
for the transaction of business and (ii) the total number
of Votes Cast with respect to a proposal (other than the
election of Directors). In the absence of a controlling
precedent to the contrary, the Company intends to treat
abstentions in this manner. Accordingly, abstentions will have
the same effect as a vote against the proposal as to which the
abstention is made.
Pursuant to regulations promulgated by the New York Stock
Exchange (NYSE), brokers and other nominees
that are NYSE member organizations are prohibited from voting in
favor of proposals relating to equity compensation plans unless
they receive specific instructions from the beneficial owner of
the shares to vote in that manner. Therefore, for any of your
shares held through a broker or other nominee who is a NYSE
member organization, such shares will only be voted in favor of
Proposals Two, Three and Four if you have provided specific
voting instructions to your broker or other nominee to vote your
shares in favor of that proposal. Otherwise, Broker non-votes
will not have any effect on the outcome of the voting on a
Proposal.
How Many Votes Are Required to Pass a Proposal?
A plurality of the votes cast is required to elect Directors.
This means that the nominees who receive the greatest number of
votes for each open seat will be elected.
A vote is withheld when a properly executed proxy is marked
WITHHELD FROM ALL NOMINEES or for all nominees except as noted
above for the election of one or more Directors.
The affirmative vote of a majority of the votes present or
represented and entitled to vote is required for all other
matters.
How Does the Board Recommend I Vote on the Proposals?
The Board recommends votes:
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FOR each of the nominees for the Board of Directors listed in
this Proxy Statement. |
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FOR the ratification and approval of the amendment of the 2003
Stock Plan, which includes an increase of 1.8 million
shares in the common stock issuable thereunder. |
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FOR the ratification and approval of an increase of
200,000 shares in the common stock issuable under the 2002
Employee Stock Purchase Plan. |
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FOR the ratification and approval of the Performance Bonus Plan. |
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FOR the appointment of PricewaterhouseCoopers LLP, independent
registered public accounting firm, to audit the consolidated
financial statements of Plantronics for its fiscal 2007. |
What Does it Mean to Vote by Proxy?
By giving your proxy, you give someone else the right to vote
your shares in accordance with your instructions. In this way,
you assure that your vote will be counted even if you are unable
to attend the Annual Meeting. In this case, we are asking you to
give your proxy to Ken Kannappan, our President and Chief
Executive Officer, Barbara Scherer, our Senior Vice
President Finance & Administration, and
Chief Financial Officer, and Rich Pickard, our Vice
President Legal, General Counsel and Secretary, and
each of them individually (the Proxyholders).
If you give your proxy but do not include specific instructions
on how to vote, the Proxyholders will vote your shares for the
election of the Boards nominees, for ratification and
approval of the amendment of the 2003 Stock Plan, which includes
an increase of 1.8 million shares in the common stock
issuable thereunder, for ratification and approval of an
increase of 200,000 shares in the common stock issuable
under the 2002 Employee Stock Purchase Plan, for ratification
and approval of the Performance Bonus Plan and for the
ratification of the appointment of the independent registered
public accounting firm.
What Is the Difference Between Holding Shares as a
Stockholder of Record and as a Beneficial Owner?
Most Plantronics stockholders hold their shares through a
stockbroker, bank or other nominee rather than directly in their
own name. As summarized below, there are some distinctions
between shares held of record and those owned beneficially.
Stockholder of Record. If your shares are
registered directly in your name with Computershare,
Plantronics transfer agent, you are considered, with
respect to those shares, the stockholder of record, and these
proxy materials are being sent directly to you by Plantronics.
As the stockholder of record, you have the right to grant your
voting proxy directly to the Proxyholders or to vote in person
at the Annual Meeting. Plantronics has enclosed or sent a proxy
card for you to use.
Beneficial Owner. If your shares are held in a
stock brokerage account or by a bank or other nominee, you are
considered the beneficial owner of shares held in street
name, and these proxy materials are being forwarded to you
by your broker or nominee which is considered, with respect to
those shares, the stockholder of record. As the beneficial
owner, you have the right to direct your broker how to vote and
are also invited to attend the Annual Meeting.
HOWEVER, SINCE YOU ARE NOT THE STOCKHOLDER OF RECORD, YOU MAY
NOT VOTE THESE SHARES IN PERSON AT THE ANNUAL MEETING UNLESS YOU
OBTAIN A SIGNED PROXY FROM THE RECORD HOLDER GIVING YOU THE
RIGHT TO VOTE THE SHARES. Your
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broker or nominee has enclosed or provided a voting instruction
card for you to use in directing the broker or nominee how to
vote your shares.
How Can I Vote?
Plantronics is offering stockholders of record four methods of
voting:
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You may indicate your vote on the enclosed proxy card by signing
and dating the card where indicated and mailing the card in the
enclosed prepaid envelope; |
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You may vote by telephone; |
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You may vote over the Internet; and |
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Finally, you may also vote in person at the Annual Meeting. |
Each stockholder is entitled to one vote for each share of
common stock on all matters presented at the Annual Meeting.
Stockholders do not have the right to cumulate their votes for
the election of Directors.
Electronic voting by telephone or over the Internet may depend
on whether you are a stockholder of record or hold your shares
as a beneficial owner as discussed above in the answer to the
question: What is the difference between holding shares as
a stockholder of record and as a beneficial owner?
Stockholders of record may vote electronically by telephone or
over the Internet by following the instructions included with
their proxy card. Stockholders whose shares are registered in
the name of a bank or brokerage firm may be eligible to vote
electronically over the Internet or by telephone. A large number
of banks and brokerage firms are participating in the ADP
Investor Communication Services online program. This program
provides eligible stockholders the opportunity to vote over the
Internet or by telephone. Voting forms will provide instructions
for stockholders whose bank or brokerage firm is participating
in ADPs program.
Stockholders not wishing to vote electronically over the
Internet or whose proxy voting form does not reference Internet
or telephone voting information should complete and return the
enclosed paper proxy voting card. Signing and returning the
proxy card or submitting the proxy over the Internet or by
telephone does not affect the right to vote in person at the
Annual Meeting.
All shares entitled to vote and represented by properly
completed proxies received before the Annual Meeting and not
revoked will be voted at the Annual Meeting as you instructed.
If you do not indicate how your shares should be voted on a
matter, the shares represented by your properly completed proxy
voting card will be voted as the Board of Directors recommends.
How Can I Vote My Shares in Person at the Annual
Meeting?
Stockholders of Record. Shares held directly in
your name as the stockholder of record may be voted in person at
the Annual Meeting. If you choose to do so, please bring the
enclosed proxy card or proof of identification.
Beneficial Owners. Shares held in street name may
be voted in person by you only if you obtain a signed proxy from
the stockholder of record giving you the right to vote the
shares.
EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING, WE
RECOMMEND THAT YOU ALSO SUBMIT YOUR PROXY AS DESCRIBED ABOVE SO
THAT YOUR VOTE WILL BE COUNTED IF YOU LATER DECIDE NOT TO ATTEND
THE MEETING.
What Happens if Additional Proposals are Presented at the
Annual Meeting?
Other than the election of Directors and the four other
proposals described in this Proxy Statement, we do not expect
any matters to be presented for a vote at the Annual Meeting. If
you grant a proxy, the persons named as Proxyholders (Ken
Kannappan, our President and Chief Executive Officer, Barbara
Scherer, our Senior Vice President
Finance & Administration, and Chief Financial Officer,
and Rich Pickard, our Vice President Legal, General
Counsel and Secretary) will have the discretion to vote your
shares on any additional matters properly presented for a vote
at the Annual Meeting. Under our By-laws, the deadline for
notifying us of any additional proposals to be presented at the
Annual Meeting has passed and, accordingly, stockholders may not
present proposals at the Annual Meeting.
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Can I Change My Vote?
You may change your proxy instructions at any time prior to the
vote at the Annual Meeting. For shares held directly in your
name, you may accomplish this by executing a new proxy bearing a
later date (which automatically revokes the earlier proxy) and
delivering it to the Secretary of the Company at or prior to the
taking of the vote at the Annual Meeting or by attending the
Annual Meeting and voting in person. Attendance at the Annual
Meeting will not cause your previously granted proxy to be
revoked unless you specifically so request. For shares held
beneficially by you, you may accomplish this by timely
submitting new voting instructions to your broker or nominee.
How Can I Contact Plantronics to Request Materials or
Information Referred to in these Questions and Answers?
You may contact us:
Plantronics,
Inc.
345
Encinal Street
Santa
Cruz, CA 95060
Attn:
Investor Relations
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By calling (831) 426-5858 or (800) 544-4660 and asking
for Investor Relations. |
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By leaving a message on the Investor Relations portal of our
Website at:
http://www.plantronics.com |
We encourage you to conserve natural resources, as well as
reduce printing and mailing costs, by signing up for
electronic delivery of our stockholder communications
materials. By signing up for electronic delivery, you can
receive our proxy materials and stockholder communications as
soon as they are available without waiting for them to arrive in
the mail. You can also reduce the number of bulky documents in
your personal files, eliminate duplicate mailings, conserve
natural resources and help us reduce our printing and mailing
costs. To sign up for electronic delivery:
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Stockholder of Record. If you are a stockholder of record
(you hold your Plantronics shares in your own name through
Plantronics transfer agent, Computershare, or you have
stock certificates), visit www.eproxyvote.com/plt to enroll. |
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Beneficial Owner. If you are a beneficial owner (your
shares are held by a brokerage firm, a bank or a trustee), visit
www.proxyvote.com to enroll. |
Your electronic delivery enrollment will be effective until
canceled. If you have questions about electronic delivery,
please call Plantronics Investor Relations at the numbers
set forth above.
What Is householding?
We may send a single set of proxy materials and other
stockholder communications to any household at which two or more
stockholders reside. This process is called
householding. This reduces duplicate mailings, saves
printing and postage costs as well as natural resources. Proxy
materials and other stockholder communications to you may be
householded based on your prior express or implied consent. If
your proxy materials are being householded and you wish to
receive separate copies of the Proxy Statement and/or Annual
Report, or if you are receiving multiple copies and would like
to receive a single copy, you may contact our Investor Relations
office by mail, telephone or the Internet, as described above.
If you received a householded mailing this year and you would
like to have additional copies mailed to you or you would like
to opt out of this practice for future mailings, please submit
your request via e-mail
to general.counsel@plantronics.com, by telephone at
(800) 544-4660 or in writing to Plantronics Corporate
Secretary at 345 Encinal Street, Santa Cruz, CA 95060.
Voting by Participants in Plantronics 401(k) Plan.
If a stockholder is a participant in the Plantronics 401(k)
Plan, the proxy card will serve as a voting instruction for the
trustees of that plan. If shares of common stock in the 401(k)
Plan are not voted by returning the proxy card
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representing such shares, those shares will be voted by the
trustees in the same proportion as the shares properly voted.
Deadline for Receipt of Stockholder Proposals for 2007 Annual
Meeting of Stockholders.
A stockholder wishing to submit a proposal considered for
inclusion in the proxy statement and form of proxy relating to
the 2007 Annual Meeting of Stockholders must submit it in the
form of a written proposal, and it must be received by
Plantronics by the end of the business day on February 16,
2007.
A stockholder wishing to make a proposal at the 2007 Annual
Meeting of Stockholders must submit a written proposal that is
received by Plantronics no later than May 2, 2007.
Date of Our Fiscal Year End.
This Proxy Statement provides information about the matters to
be voted on at the Annual Meeting and also additional
information about Plantronics, its Officers and Directors. Some
of the information is stated as of the end of fiscal 2006 and
some information is provided as of a more current date. Each of
our fiscal years end on the Saturday closest to the last day of
March. Our fiscal 2006 ended on April 1, 2006. For purposes
of consistent presentation, we have indicated in this Proxy
Statement that each fiscal year ended March 31
of the given year, even though the actual fiscal year end may
have been on a different calendar date.
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CORPORATE GOVERNANCE
Strong corporate governance is an integral part of
Plantronics core values. Our Companys corporate
governance policies and procedures are available on the
Corporate Governance portal of the Investor Relations section of
the Companys website, http://www.plantronics.com. The
corporate governance portal includes the Companys
Corporate Governance Guidelines, Board Committee Charters,
Worldwide Code of Business Conduct and Ethics, Whistleblower
Policy, Stockholder Access to Board of Directors Policy, CEO
Statement on Corporate Governance, Investor Relations
Communications Policy and Director Candidates Nomination Policy.
This information is also available in print to any shareholder
by making a request to Plantronics, Inc., 345 Encinal
Street, Santa Cruz, CA 95060, Attn: Investor Relations.
We provide below specific information regarding certain
corporate governance practices.
Worldwide Code of Business Conduct and Ethics
The Company has a Worldwide Code of Business Conduct and Ethics
which applies to all employees, Senior Officers, and Directors.
Any waiver of any provision of the Code for a Director or
Executive Officer of the Company must be approved in writing by
the Board and promptly disclosed to our stockholders. For
further information see the Corporate Governance portal of the
Investor Relations section of the Companys website,
http://www.plantronics.com.
Whistleblower Policy
The Plantronics Audit Committee has established a whistleblower
hotline and website available to all employees, stockholders,
and the general public for the anonymous submission of suspected
violations including but not limited to accounting, internal
controls, or auditing matters, conflicts of interest, fraud,
harassment, policy violations, environmental violations,
substance abuse, theft and workplace violence. For further
information see the Corporate Governance portal of the Investor
Relations section of the Companys website,
http://www.plantronics.com.
Stockholder Access to Board of Directors Policy
The Companys Stockholder Access to the Board of Directors
Policy outlines methods by which shareholders may communicate
with Directors. Stockholders may communicate directly with the
full Board, the Presiding director, the non-management Directors
as a group, or with specified individual Directors by any one of
several methods. Communications marked confidential will not be
screened prior to delivery to the addressed parties. For further
information see the Corporate Governance portal of the Investor
Relations section of the Companys website,
http://www.plantronics.com.
Formation of a Qualified Legal Compliance Committee
The Audit Committee was designated by the Board of Directors to
act as a Qualified Legal Compliance Committee
(QLCC). Please see the description of this
QLCC under the heading Audit Committee on page 9.
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PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A Board of seven Directors is to be elected at the 2006 Annual
Meeting of Stockholders. One of the nominees listed below is
standing for election. Six of the nominees listed below are
standing for re-election. Unless otherwise instructed, the
Proxyholders will vote the proxies received by them for
Plantronics seven nominees named below. If any nominee of
Plantronics is unable or declines to serve as a Director at the
time of the Annual Meeting of Stockholders, the proxies will be
voted for any nominee who shall be designated by the present
Board of Directors to fill the vacancy. We are not aware of any
nominee who will be unable or will decline to serve as a
Director. The term of office for each person elected as a
Director will continue until the next Annual Meeting of
Stockholders or until a successor has been elected and qualified.
The names of the nominees and certain information about them as
of June 1, 2006 are set forth below:
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Director | |
Name of Nominee |
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Positions With Plantronics |
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Marv Tseu(1)(2)(3)
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58 |
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Director and Chair of the Board |
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1999 |
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Ken Kannappan
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46 |
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Director, President and Chief Executive Officer |
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1999 |
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Gregg Hammann(2)(3)
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43 |
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Director |
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2005 |
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Marshall Mohr(1)(2)
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50 |
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Director |
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2005 |
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Trude Taylor(3)(4)
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85 |
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Director |
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1989 |
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Roger Wery(1)(4)
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45 |
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Director |
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2001 |
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John Hart(5)
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60 |
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Director |
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2006 |
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Member of the Nominating and Corporate Governance Committee |
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Member of the Audit Committee |
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Member of the Compensation Committee |
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Member of the Mergers and Acquisitions Committee |
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Appointed to the Board of Directors in 2006 and standing for
election. |
The Board of Directors currently consists of seven
(7) members. Mr. John Hart was appointed as a Director
on March 8, 2006 by the full Board of Directors upon
recommendation by the Nominating and Corporate Governance
Committee, in accordance with the charter and principles of that
Committee.
Vote Required
If a quorum is present in person or represented by proxy at the
2006 Annual Meeting of Stockholders, the seven nominees
receiving the highest number of votes will be elected to the
Board of Directors. Votes withheld from any nominee will be
counted for purposes of determining the presence or absence of a
quorum for transaction of business at the Annual Meeting, but
will have no other legal effect upon the election of Directors
under Delaware law.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE NOMINEES LISTED ABOVE.
Business Experience of Directors
Mr. Tseu was elected to the Board of Directors in
1999 and serves as Chair of the Board and the Presiding Director
of executive sessions. Since May 2006 Mr. Tseu has served
as Chief Executive Officer and Director of Axesstel, Inc., a
leader in the design and development of fixed wireless voice and
broadband data products. From October 2002 to March 2006,
Mr. Tseu served as the Chief Executive Officer and a
founder of Active Reasoning, Inc., an early stage private
company that produces resource management software to help
7
enterprises manage their IT operations. Since November 2001,
Mr. Tseu has also been a consulting venture partner with
ComVentures, LLP, a venture capital firm focusing on
communications companies. From February 2001 to July 2001,
Mr. Tseu was Chief Executive Officer of Method Networks,
Inc., an Internet technology company helping enterprises
automate the management of their Internet networks. From October
1999 to October 2000, Mr. Tseu was President and Chief
Executive Officer of SiteSmith, Inc., a provider of outsourced
Internet site operations that he co-founded. From August 1998 to
July 1999, Mr. Tseu served as President of Structured
Internetworks, Inc., a company engaged in the design and
marketing of bandwidth allocation products.
Mr. Kannappan has served as President and Chief
Executive Officer of Plantronics and as a member of the Board of
Directors since 1999. He joined Plantronics in February 1995 as
Vice President of Sales and was promoted to various positions
and named President and Chief Operating Officer in March 1998.
Prior to joining Plantronics, Mr. Kannappan was Senior Vice
President of Investment Banking for Kidder, Peabody &
Co. Incorporated, where he was employed for 10 years.
Mr. Kannappan has a Bachelor of Arts degree in Economics
from Yale University and an M.B.A. from Stanford University.
Mr. Kannappan is a member of the Board of Directors of
Mattson Technology, Inc., a supplier of advanced process
equipment for the semiconductor industry, and a Director of
Integrated Device Technology, Inc., a manufacturer of
communications integrated circuits.
Mr. Hammann has been a member of the Board of
Directors since 2005. He has been Chairman, President and Chief
Executive Officer of Nautilus, Inc., a leading manufacturer of
health and fitness products, since 2003. Previously, he held
leadership positions at Levi Strauss & Company,
including Chief Customer Officer and President of the Americas,
and at Coca-Cola Company where he was Vice President, Fountain
CMG, and Officer and Director of Strategic Issues.
Mr. Hammann also has held management positions at Famous
Footwear, The Rayovac Corporation, and Procter &
Gamble. Mr. Hammann graduated from the University of Iowa.
Mr. Hammann has an M.B.A. from the University of Wisconsin
and Director Certification from UCLA. Mr. Hammann is a
member of the Board of Directors of RedEnvelope, Inc., a branded
online retailer of upscale gifts.
Mr. Mohr has been a member of the Board of Directors
since 2005. He has been Senior Vice President and Chief
Financial Officer of Intuitive Surgical, Inc., a provider of
surgical robotics, since March 2006. Prior to joining Intuitive
Surgical, Mr. Mohr was Vice President and Chief Financial
Officer of Adaptec, Inc. Prior to joining Adaptec in July 2003,
Mr. Mohr was an audit partner with PricewaterhouseCoopers
where he was most recently the managing partner of the
firms west region technology industry group and led its
Silicon Valley accounting and audit advisory practice.
Mr. Mohr received his B.B.A. in accounting and finance from
Western Michigan University. Mr. Mohr is a member of the
Board of Directors of Atheros Communications, Inc., a developer
of semiconductor system solutions for wireless communications
products. Mr. Mohr also serves as the Chairman of Atheros,
Inc.s Audit Committee.
Mr. Taylor has been a member of the Board of
Directors since 1989. He has been a private investor since 1987
and a principal in TC Associates, a management consulting firm,
since 1984. Earlier in his career, Mr. Taylor was Chairman
of the Board of Directors, President and Chief Executive Officer
of Electronic Memories and Magnetics Corporation, a manufacturer
of computer peripherals. Mr. Taylor is currently a Director
of Professional Business Bank and several privately held
corporations.
Mr. Wery has been a member of the Board of Directors
since 2001. He is a Director and employee of PRTM, a management
consulting firm that provides consulting services to
technology-centric companies. He advises telecommunications
services and equipment providers, as well as computer and
semiconductor companies. He assists senior management of these
organizations in formulating and implementing growth strategies,
as well as enterprise-wide performance improvement initiatives.
Mr. Wery joined PRTM in April 2000. Prior to joining PRTM,
Mr. Wery was an Executive Vice President of Adventis
(previously Renaissance Worldwide, Inc.), an international
consultancy, and also spent six years with Mercer Management, a
consulting arm of Marsh & McLennan Company.
Mr. Hart has been a member of the Board of Directors
since March 2006. He is a former senior vice president and Chief
Technology Officer of 3Com. At 3Com, Mr. Hart was
responsible for the overall strategic
8
direction of the company during the 10 year period
(September 1990-September 2000) in which it grew annual revenue
from $400 million to almost $6 billion. He architected
and led 3Coms Fast, Cheap and Simple
(FCS) first/last mile networking strategy and was
responsible for 3Coms Advanced Development Lab which
pioneered Ethernet adapter and switch solutions, 802.11
solutions, and cable modems/low cost routers. Prior to 3Com,
Mr. Hart was vice president of engineering at Vitalink
Communications Corporation where he led the group that invented,
patented and shipped the industrys first Ethernet
switching products. Mr. Hart holds a BS in Mathematics from
the University of Georgia.
Board Meetings and Committees
The Board of Directors of Plantronics held a total of six
meetings, and acted by unanimous written consent four times,
during the fiscal year ended March 31, 2006. The Directors
met twice in executive sessions without Mr. Kannappan
present. The Board of Directors has three formal committees, an
Audit Committee, a Compensation Committee and a Nominating and
Corporate Governance Committee. The Board of Directors also has
an informal Mergers & Acquisitions Committee
(M&A Committee). This M&A Committee was
formed in March 2005 to advise management during the early
stages of merger and acquisition activity. Any merger or
acquisition transaction that involves the transfer of
$5 million or more of consideration will be reviewed by the
Board of Directors prior to completion. Each of the three formal
committees of the Board has adopted a written charter which is
available at the Corporate Governance Portal of the Investor
Relations section of the Companys website,
http://www.plantronics.com. This information is also available
in print to any shareholder by making a request to Plantronics,
Inc., 345 Encinal Street, Santa Cruz, CA 95060, Attn: Investor
Relations.
Each Director attended more than 75% of the meetings of the
Board of Directors and more than 75% of the meetings of the
committees upon which that Director served.
Board of Directors Education
On February 27, 2006 all members of our Board of Directors
except Mr. Hammann actively participated in an
8-hour program on
corporate governance and Director education. The program was
accredited by Institutional Shareholder Services
(ISS). Mr. Hammann previously attended courses
that provided him with ISS accreditation.
Board of Directors Attendance at Annual Meetings
The Company recognizes that Directors attendance at annual
meetings can provide investors with an opportunity to
communicate with directors about issues affecting the company.
Although we have not adopted a formal policy, we encourage all
of our Directors to attend the Plantronics annual meeting each
year. In the event that a Director cannot attend in person, the
Company encourages Directors to attend telephonically. In fiscal
2006, one Director attended the July 21, 2005 Annual
Meeting of Plantronics in person and five directors attended
telephonically.
Audit Committee
The Audit Committee consisted of Directors Tseu, Hammann, and
Mohr (Chair). The Audit Committee met six times during fiscal
2006. This Committee is responsible for overseeing actions taken
by Plantronics financial reporting staff, internal control
processes, and for hiring and supervising the independent
registered public accounting firm, among other matters. The
Board of Directors has determined that each member of the Audit
Committee is, and has been at all times during the 2006 fiscal
year, independent as defined by the NYSE listing
standards and that Directors Tseu, Hammann and Mohr are
audit committee financial experts as that term has
been defined by the Securities and Exchange Commission
(SEC). A report of the Audit Committee is attached
to this Proxy Statement as Appendix A.
The Audit Committee was designated by the Board of Directors to
act as a Qualified Legal Compliance Committee (QLCC)
The QLCC was created to review any report made directly, or
otherwise made known to the QLCC by attorneys employed or
retained by the Company or its subsidiaries of a material
violation of
9
US federal or state securities or other law. The QLCC may
receive and consider reports, investigate them, retain material
experts or counsel to assist or advise them and make
recommendations of an appropriate response. The QLCC may notify
the SEC of any material violation.
Compensation Committee
The Compensation Committee consisted of Directors Taylor
(Chair), Tseu and Hammann, each of whom meets the requirements
for independence as defined under the NYSE listing standards.
The Compensation Committee met four times during fiscal 2006.
This Committee is responsible for determining salaries,
incentives and other forms of compensation for directors,
officers and other highly compensated employees of Plantronics
and administers various incentive compensation and benefit
plans. A report of the Compensation Committee is attached to
this Proxy Statement as Appendix B.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee consisted of
Directors Tseu (Chair), Wery and Mohr, each of whom meets the
requirements for independence as defined by NYSE listing
standards. The Nominating and Corporate Governance Committee
held two meetings during fiscal 2006. The Nominating and
Corporate Governance Committee is responsible under the
direction of the Board for identifying and interviewing
potential additions or replacement members of the Board and
assists the Board in determining the appropriate governance
guidelines for the Board, management and the Company.
Generally, the Nominating and Corporate Governance Committee
will review the qualifications of any candidates who have been
properly recommended or nominated by a stockholder, as well as
those candidates who have been identified by management,
individual members of the Board of Directors or, if the
Nominating and Corporate Governance Committee determines, a
search firm. Such review may, in the Nominating and Corporate
Governance Committees discretion, include a review solely
of information provided to the Nominating and Corporate
Governance Committee or may also include discussions with
persons familiar with the candidate, an interview with the
candidate or other actions that the Nominating and Governance
Committee deems proper, including the retention of third parties
to review potential candidates.
Stockholders wishing to recommend persons for consideration by
the Nominating and Corporate Governance Committee as nominees
for election to the Board can do so by writing to the Secretary
of Plantronics at its principal executive offices giving each
such persons name, biographical data and qualifications,
not less than 20 days prior to the Annual Meeting. Any such
recommendation should be accompanied by a written statement from
the person recommended of his or her consent to be named as
nominee and, if nominated and elected, to serve as a Director.
Plantronics By-laws also contain a similar procedure for
stockholder nomination of Directors. Additional information
regarding director nominations can be found in our Corporate
Governance Guidelines which are posted on the Corporate
Governance portal of Investor Relations section of the
Companys website, http://www.plantronics.com.
In its evaluation of Director candidates, including the members
of the Board of Directors eligible for re-election, the
Committee will consider the current size and composition of the
Board of Directors, the needs of the Board of Directors and the
respective committees of the Board of Directors and the
qualifications of candidates in light of these needs as well as
such other factors as the Committee may consider appropriate.
The Nominating and Corporate Governance Committee has not
formally established any specific, minimum qualifications that
must be met by each candidate for the Board of Directors or
specific qualities or skills that are necessary for one or more
of the members of the Board of Directors to possess.
Compensation of Directors
Prior to January 2, 2006, each Director of Plantronics,
other than Mr. Kannappan, received a retainer fee of
$5,000 per quarter, and the Chair of the Board received a
quarterly retainer fee of $10,000. As of January 2, 2006,
each Director of Plantronics, other than Mr. Kannappan,
receives a retainer fee of $7,500 per quarter,
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and the Chair of the Board receives a quarterly retainer fee of
$12,500. Directors also were entitled to reimbursement of
expenses incurred in connection with attendance at Board and
committee meetings.
Until January 2, 2006, each director, other than
Mr. Kannappan, also received a fee of $1,000 for attendance
at each regularly scheduled quarterly meeting of the Board and
each executive session of the Board that is not on the same date
as a regularly scheduled quarterly meeting of the Board, and the
Chair of the Board received a fee of $2,000 for attendance at
each such meeting. Beginning January 2, 2006, no attendance
fees will be paid to directors for meetings of the Board.
Until January 2, 2006, each member of the Compensation
Committee received $1,000 for attendance at each regularly
scheduled committee meeting, and the Chair of the Compensation
Committee received $2,000 for attendance at each such meeting.
As of January 2, 2006, each member of the Compensation
Committee receives a quarterly retainer fee of $750, and the
Chair of the Compensation Committee receives a quarterly
retainer fee of $1,250. As of January 2, 2006, no meeting
attendance fees are paid to Compensation Committee members.
Each quarter, the Audit Committee reviews and approves in a
telephonic or regular committee meeting Plantronics
quarterly and
year-to-date financial
statements prior to public disclosure. The Audit Committee
members do not receive compensation for their attendance at
telephonic meetings. Until January 2, 2006, for all other
meetings of the Audit Committee, each member received $1,000 for
their attendance, and the Chair of the Audit Committee received
$2,000 for attendance at each such meeting. As of
January 2, 2006, for all other meetings of the Audit
Committee, each member receives a quarterly retainer fee of
$1,250, and the Chair of the Audit Committee receives a
quarterly retainer fee of $2,500. As of January 2, 2006, no
meeting attendance fees are paid to Audit Committee members.
Until January 2, 2006, members of the Nominating and
Corporate Governance Committee, including the Chair, received
$1,000 in each quarter in which there was an active search
underway for a new member of the Board and for attendance at
each meeting of this committee. The Chair of the Nominating and
Corporate Governance Committee received no further remuneration.
As of January 2, 2006, each member receives a quarterly
retainer fee of $500, and the Chair of the Nominating and
Corporate Governance Committee receives a quarterly retainer fee
of $1,000.
Members of the M&A Committee do not receive additional
compensation for attendance at meetings or participation on this
Committee.
Each non-employee Director of Plantronics is entitled to
participate in Plantronics 2003 Stock Plan (the
Plan), which was approved by stockholders at our
2003 Annual Meeting and subsequently amended and approved at our
2004 and 2005 Annual Meetings. Pursuant to the Plan, on
January 15, 2006, Directors Mohr, Taylor, Tseu, Wery and
Hammann each received an option to
purchase 3,000 shares of common stock at an exercise
price of $31.89 per share, the then current fair market
value of our common stock. In addition, on March 8, 2006,
Director John Hart received an option to
purchase 12,000 shares of common stock at an exercise
price of $34.27 as a result of being appointed as a new Director
of Plantronics.
Director Independence
The Board of Directors has determined that, except for
Mr. Kannappan, each of the current Directors and Directors
nominated for election are independent under the rules of the
New York Stock Exchange (as well as Rule 10A-3(b) of the
Securities Exchange Act in the case of Audit Committee members).
In determining Director independence, the Board of Directors
reviewed not only relationships between the Director and the
Company, but also relationships between the Company and the
organizations with which the Director is affiliated. After
considering the relevant facts and circumstances, the Board of
Directors determined that none of these individuals has a
material relationship with the Company (either directly or as a
partner, shareholder, or officer of an organization that has a
relationship with the Company), other than as a Director of the
Company, and that each of these Directors is free from any
relationship with the Company that would impair the
Directors ability to exercise independent judgment. Marv
Tseu is the Chair of the Board and presides at executive
sessions of independent Directors.
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Mr. Wery is a Director and employee of the consulting firm,
PRTM which entered into a consulting agreement (the
Agreement) with Plantronics in June 2000 for the provision
of certain management consulting services. Mr. Wery is not,
and has not since fiscal year 2001, been involved in the
services provided under the Agreement. In fiscal 2004, PRTM
billed Plantronics $15,910 for further work under the Technology
and Product Development Improvement Project. In fiscal 2005,
PRTM billed Plantronics $65,160.27 for further work under the
Technology and Product Development Improvement Project. In
fiscal 2006, no work was performed by PRTM for Plantronics and
accordingly no amount was billed. Finally, the compensation paid
to PRTM by Plantronics in each of fiscal years 2004 and 2005 was
less than 1% of PRTMs consolidated gross revenues for each
such fiscal year. The Board of Directors has determined, after
careful consideration of these circumstances, that Mr. Wery
is independent.
The Board of Directors has also determined that each member of
the Audit Committee, the Compensation Committee and the
Nominating and Corporate Governance Committee meets the
independence requirements applicable to those committees
prescribed by the NYSE and the SEC. The Board of Directors has
further determined that Directors Marv Tseu, Marshall Mohr and
Gregg Hammann are audit committee financial experts
as such term is defined in Item 401(h) of
Regulation S-K
promulgated by the SEC.
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PROPOSAL TWO
APPROVAL OF AMENDMENTS TO THE 2003 STOCK PLAN
The stockholders are being asked to approve certain amendments
to the 2003 Stock Plan (the Plan) as described in
further detail below. Our Board of Directors (the
Board) has approved the amendments to the Plan,
subject to approval from our stockholders at the Annual Meeting.
Our named executive officers and directors have an interest in
this proposal as each of them is eligible to receive grants
under the Plan. On June 1, 2006, the closing price of a
share of Plantronics common stock on the NYSE was $22.28.
The stockholders are being asked to approve an increase to the
number of shares of Common Stock authorized for issuance under
the Plan from three million three hundred thousand (3,300,000)
shares to five million one hundred thousand (5,100,000) shares,
an increase of one million eight hundred thousand (1,800,000)
shares. As of April 30, 2006, there remained
554,884 shares available for future awards under the Plan.
As of April 30, 2006, options to
purchase 8,243,105 shares of the Companys common
stock were outstanding, which includes 129,000 options granted
separately from the Plan as an inducement to Altec Lansing
employees in connection with the acquisition. These options to
purchase 8,243,105 shares had a weighted average
exercise price of $26.77 and a weighted average remaining
contractual life of 5.37 years. As of April 30, 2006,
336,750 shares of restricted stock had been issued and were
outstanding. Subject to stockholder approval of the increase of
one million eight hundred thousand shares, there would then be
2,354,884 shares available for issuance under the Plan.
Our current plan is to grant options and awards of restricted
stock covering approximately 1,500,000 shares over the next
12 months. This level of grant would amount to 3.2% of the
common shares outstanding as of April 30, 2006. Each year,
we experience some cancellation of outstanding awards. Based on
our historical cancellation rates, we anticipate cancellation of
options and forfeitures of restricted stock covering
approximately 300,000 shares. If that assumption proves
correct, our net grants (grants less cancellations) would equal
approximately 2.5% of the common shares outstanding as of
April 30, 2006.
We believe strongly that the increase of shares issuable under
the Plan is essential to our continued success. Our employees
are our most valuable assets. Our Board has determined that it
is in the best interest of Plantronics and our stockholders to
increase the shares issuable under the Plan. The Board believes
that grants of stock options and other awards available under
the Plan help create long-term equity participation in
Plantronics and thereby assist us in attracting, retaining,
motivating and rewarding employees and directors.
The following are other amendments we propose to make to the
Plan:
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In order to limit the Plans cost and its dilutive effect
and reinforce our commitment to follow procedures and practices
that we believe constitute the best practices for
the market in which we operate, we have amended the Plan to
provide that awards of restricted stock and restricted stock
units with a per share or per unit purchase price lower than
100% of fair market value on the grant date will be counted
against the total number of shares issuable under the Plan as
2.5 shares for every 1 share subject thereto.
Correspondingly, to the extent that a share that counted as
2.5 shares against the Plan reserve at the time of grant
pursuant to the preceding sentence is recycled back into the
Plan (e.g., upon award termination or share repurchase), the
Plan will be credited with 2.5 shares that will thereafter
be available for future issuance under the Plan. |
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We have amended the Plan to conform the Plan to the
Institutional Shareholder Services position on share
counting. |
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We have amended the Plan to increase the maximum aggregate
initial value of a grant of either restricted stock or
restricted stock units from $600,000 to $1,000,000 in any one
fiscal year. |
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We have amended the Plan to add specific performance criteria so
that the Administrator may establish performance objectives upon
achievement of which certain Awards will vest or be issued,
which in turn will allow the Company to receive income tax
deductions under Section 162(m) of the Code. |
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The amended Plan does not differ from the current version of the
Plan in any other material respect.
Vote Required
Approval of the amendment of the 2003 Stock Plan, which includes
an increase of 1.8 million shares in the common stock
issuable requires the affirmative vote of the holders of a
majority of the shares of the Companys common stock that
are present in person or by proxy and entitled to vote at the
Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR APPROVAL OF THE AMENDMENT OF THE 2003 STOCK
PLAN, WHICH INCLUDES AN INCREASE OF 1.8 MILLION SHARES IN THE
COMMON STOCK ISSUABLE THEREUNDER.
Summary of the 2003 Stock Plan
The following is a summary of the principal features of the Plan
and its operation. The following summary is qualified in its
entirety by reference to the Plan as set forth in
Appendix C, attached hereto.
Purposes. The purposes of the Plan are to attract and
retain the best available personnel for positions of substantial
responsibility, to provide additional incentive for directors,
employees and consultants of Plantronics, and to promote the
success of Plantronics business.
Administration. The Plan is administered by the Board or
any committee of individuals appointed by the Board, referred to
as the administrator. The administrator may make any
determinations deemed necessary or advisable for the Plan. The
administrator has full power to select the individuals to whom
awards will be granted, to make any combination of awards to any
participant and to determine the specific terms of each grant,
subject to the provisions of the Plan. The interpretation and
construction of any provision of the Plan by the administrator
will be final and conclusive.
Term of the Plan. The Plan became effective as of
September 24, 2003, and will continue for a term of
10 years unless sooner terminated by the Board.
Eligibility. Nonstatutory stock options may be granted to
employees, directors and consultants of Plantronics or its
parent or subsidiary companies (each referred to herein as a
participant); provided, that, non-employee
directors may only receive automatic non-employee director stock
option grants (described below). As of April 30, 2006 there
were 1,279 employees and seven (7) directors entitled to
receive grants under the Plan. Incentive stock options may only
be granted to employees of Plantronics or its parent or
subsidiary companies. Stock appreciation rights, restricted
stock awards and restricted stock units may be granted only to
employees and consultants of Plantronics and its parent or
subsidiary companies.
Shares Subject to the Plan. If stockholders approve
Proposal Two, a total of 5,100,000 shares of
Plantronics Common Stock will be reserved for issuance
under the Plan. As of April 30, 2006, 554,884 shares
of Common Stock were available for issuance under the Plan.
Shares subject to options or SARs will be counted against the
share reserve as 1 share for every share subject thereto.
Shares or units subject to restricted stock or restricted stock
unit awards with a per share or unit purchase price lower than
100% of fair market value on the date of grant will be counted
against the total number of shares issuable as 2.5 shares
for every 1 share subject thereto. Correspondingly, to the
extent that a share that counted as 2.5 shares against the
Plan reserve at the time of grant pursuant to the preceding
sentence is recycled back into the Plan (e.g., upon award
termination or share repurchase), the Plan will be credited with
2.5 shares that will thereafter be available for future
issuance under the Plan.
Stock Options. Each option granted under the Plan is to
be evidenced by a written award agreement between Plantronics
and the participant and is subject to the following additional
terms and conditions:
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(a) Maximum Grant. An individual may not be granted
options to purchase more than 500,000 shares during any
fiscal year. Notwithstanding this limit, in connection with such
individuals initial employment with Plantronics, he or she
may be granted options to purchase up to an additional
500,000 shares. |
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(b) Grants to Non-Employee Directors. Plantronics
may grant only nonstatutory stock options to its non-employee
directors. Each non-employee director will be granted an initial
option to purchase 12,000 shares of Common Stock when
such person first becomes a director of the Company. Thereafter,
each non-employee director will be granted an option to
purchase 3,000 additional shares of Common Stock on January
15 of each year, provided the non-employee director will
continue to be a non-employee director of the Company through
the applicable date and if, on such date, the eligible director
will have served on the Board of Directors for at least six
(6) months. Options granted to non-employee directors
expire seven (7) years after the date of grant. In the
event a non-employee director ceases to be a director as a
result of his or her death, disability or retirement, any
options granted to such director following the 2004 Annual
Meeting will remain exercisable, to the extent vested on the
date of such termination, for up to one year following such
termination. Other than the option grants described in this
paragraph, non-employee directors will not be eligible to
receive other awards pursuant to the Plan. In addition, in the
event of a merger of Plantronics with or into another
corporation or a change of control (as defined in
the Plan) in which a non-employee director is terminated or
asked to resign, options granted to such non-employee director
will vest and be exercisable with respect to 100% of the shares
subject to such option immediately prior to such merger or
change of control. |
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(c) Exercise of the Option. The administrator
determines when options become exercisable, however, options
generally are not exercisable until at least 12 months have
passed following the date of the option grant. An option is
exercised by giving written or electronic notice of exercise to
Plantronics, specifying the number of full shares of Common
Stock to be purchased and tendering payment of the purchase
price to Plantronics. The acceptable methods of payment for
shares issued upon exercise of an option are set forth in the
award agreement and may consist of (1) cash, (2) check,
(3) certain shares of Common Stock, (4) the delivery
of a properly executed exercise notice together with such other
documentation as the administrator and the broker, if
applicable, will require to effect a cash-less exercise of the
option and delivery to Plantronics of the amount of proceeds
required to pay the exercise price, (5) any combination of
the foregoing methods, or (6) such other consideration and
method of payment permitted under applicable law; provided,
however, that the issuance of a promissory note is not a
permissible method of payment. |
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(d) Exercise Price. The exercise price of options
granted under the Plan is determined on the date of grant. The
exercise price of incentive stock options and nonstatutory stock
option must be at least 100% of the fair market value per share
at the time of grant. An incentive stock option granted to a 10%
stockholder may not have an exercise price less than 110% of the
fair market value per share of the Common Stock at the time of
grant. The fair market value of a share of Common Stock will be
the closing sales price for such stock (or the closing bid, if
no sales were reported) as quoted on The New York Stock Exchange
on the date of grant. |
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(e) Termination. If the participants
directorship, employment or consulting relationship with
Plantronics (or its parent or subsidiary corporations) is
terminated for any reason, including death or total and
permanent disability, options may be exercised after such
termination as to all of the shares as to which the participant
was entitled to exercise at the date of such termination. The
options may be exercised after termination within the period of
time as is specified in the award agreement. If such period of
time is not specified in the award agreement, then such period
of time will equal 3 months in the case of termination
other than upon death, disability or, for options granted prior
to the 2004 Annual Meeting, retirement, and 12 months in
the case of termination upon death, disability or, for options
granted after the 2004 Annual Meeting, retirement.
Notwithstanding the foregoing, all options must be exercised
prior to the expiration of the term of an option as set forth in
the award agreement. |
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(f) Term and Termination of Options. At the time an
option is granted, the administrator determines the period
within which the option may be exercised. In no event may the
term of an incentive stock option be longer than 7 years.
No person may exercise an option after the expiration of its
term. An option granted to a participant who, at the time such
option is granted, owns more than 10% of the voting power of all
classes of stock of Plantronics, may not have a term of more
than 5 years. |
15
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(g) Other Provisions. The award agreement may
contain such other terms, provisions and conditions not
inconsistent with the Plan as the administrator may determine. |
Stock Appreciation Rights. Each stock appreciation right
granted under the Plan will be evidenced by an award agreement
between Plantronics and the participant and is subject to the
following additional terms and conditions:
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(a) Maximum Grant. An individual may not be granted
stock appreciation rights to purchase more than
500,000 shares during any fiscal year. Notwithstanding this
limit, in connection with such individuals initial
employment, he or she may be granted stock appreciation rights
to purchase up to an additional 500,000 shares. |
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|
(b) Exercise of the Stock Appreciation Right. The
administrator determines when stock appreciation rights become
exercisable, however, stock appreciation rights generally are
not exercisable until at least 12 months have passed
following the date of grant. A stock appreciation right is
exercised by giving written or electronic notice of exercise to
Plantronics and specifying the number of shares of Common Stock
to which the award is being exercised. Plantronics can pay the
appreciation in either cash or shares of Common Stock. |
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|
(d) Exercise Price. The administrator determines the
exercise price of stock appreciation rights on the date of
grant, which must be at least 100% of the fair market value per
share at the time of grant. |
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|
(e) Payment. Upon exercise of a stock appreciation
right, a participant will be entitled to receive payment from
Plantronics in an amount determined by multiplying: |
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|
The difference between the fair market value of a share on the
date of exercise over the exercise price; times |
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The number of shares with respect to which the stock
appreciation right is exercised. |
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In no event, however, may the payment exceed 100% of the
exercise price associated with the stock appreciation right. At
the discretion of the administrator, the payment may be in cash,
in shares of equivalent value, or in some combination thereof. |
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(f) Termination. If the participants
directorship, employment or consulting relationship with
Plantronics is terminated for any reason, including death or
total and permanent disability, stock appreciation rights may be
exercised after such termination as to all of the shares as to
which the participant was entitled to exercise at the date of
such termination. The stock appreciation rights may be exercised
after termination within the period of time as is specified in
the award agreement. If such period of time is not so specified,
then such period of time will equal 3 months in the case of
termination other than upon death, disability or, for stock
appreciation rights granted prior to the 2004 Annual Meeting,
retirement, and 12 months in the case of termination upon
death, disability or, for stock appreciation rights granted
after the 2004 Annual Meeting, retirement. Notwithstanding the
foregoing, all stock appreciation rights must be exercised prior
to the expiration of their term as set forth in the award
agreement. |
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(g) Term and Termination of Stock Appreciation
Rights. At the time a stock appreciation right is granted,
the administrator determines the period within which the stock
appreciation right may be exercised, which in no event will be
longer than 7 years form the date of grant. |
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|
(h) Other Provisions. The award agreement may
contain such other terms, provisions and conditions not
inconsistent with the Plan as the administrator may determine. |
16
Restricted Stock Awards. Each restricted stock award
granted under the Plan is to be evidenced by an award agreement
between Plantronics and the participant and is subject to the
following additional terms and conditions:
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(a) Limitation. The maximum aggregate initial value
of a grant to a participant is $1,000,000. |
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(b) Termination. Subject to the terms of an
agreement between Plantronics and a participant, if the
participants directorship, employment or consulting
relationship with Plantronics is terminated for any reason,
including death or total and permanent disability, any unvested
shares will be forfeited to Plantronics or Plantronics may
repurchase any unvested stock obtained by the participant
pursuant to a restricted stock award. Unless the administrator
provides otherwise, the purchase price of the repurchased shares
will equal the price originally paid, if any, for such shares by
the participant. |
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(c) Term of Restricted Stock Awards. The
administrator determines the period during which a restricted
stock award will vest, which period must be at least 1 year
from the date of grant. In addition, if a restricted stock award
is not subject to the achievement of performance goals, then
such award will fully vest over a period of at least
3 years from the grant date. |
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(d) Other Provisions. The restricted stock award
agreement may contain such other terms, provisions and
conditions not inconsistent with the Plan as may be determined
by the administrator. |
Restricted Stock Units. Restricted stock units are awards
that will result in a payment to a participant only if the
performance goals or other vesting criteria established by the
administrator are achieved or the awards otherwise vest. Each
award of restricted stock units will be evidenced by an award
agreement between Plantronics and the participant and is subject
to the following additional terms and conditions:
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(a) Limitation. The maximum aggregate initial value
of a grant to a participant is $1,000,000. |
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(b) Terms of Restricted Stock Unit Awards. The
administrator will establish organizational, individual
performance goals or other vesting criteria in its discretion,
which, depending on the extent to which they are met, will
determine the number and/or the value of restricted stock units
to be paid out to participants. The vesting period must be at
least 1 year from the date of grant, provided that if an
award is not subject to the achievement of performance goals,
then such award will fully vest over a period of at least
3 years from the grant date. |
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(c) Other Provisions. The award agreement may
contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the
administrator. |
Performance Goals. The granting or vesting of awards of
restricted stock and restricted stock units under the Plan may
be made subject to the attainment of performance goals relating
to one or more business criteria within the meaning of
Section 162(m) of the Code and may provide for a targeted
level or levels of achievement including: annual revenue; cash
position; earnings per share; individual objectives; net income;
operating cash flow; operating income; return on assets; return
on equity; return on sales; and total shareholder return. The
performance goals may differ from participant to participant and
from Award to Award and may be used to measure the performance
of the Company as a whole or a business unit of the Company and
may be measured relative to a peer group or index.
Nontransferability of Awards. Awards granted under the
Plan are generally not transferable by a participant, however,
the administrator may grant limited transferability of
identified and vested awards (i) by will, (ii) by the
laws of descent and distribution, or (iii) to family
members (as such term is defined in the general instructions to
Form S-8 under the
Securities Act of 1933, or any successor thereto) through gifts
or domestic relations orders, as permitted by the instructions
to Form S-8 of the
Securities Act of 1933.
Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Change of Control
Changes in Capitalization. Subject to any required action
by the stockholders of Plantronics, in the event that
Plantronics Common Stock changes by reason of any stock
split, reverse stock split, stock dividend, combination,
reclassification or other similar change in our capital
structure effected without the receipt of
17
consideration, appropriate adjustments will be made in the
number of shares of Common Stock subject to the Plan, the number
of shares of Common Stock subject to any outstanding award under
the Plan, the exercise price of any such outstanding award, and
any per-person or other share limits under the Plan. The Board
will make any such adjustment and its determination in that
respect will be final, binding and conclusive.
Dissolution or Liquidation. In the event of a liquidation
or dissolution, any unexercised award will terminate. The
administrator may, in its sole discretion, provide that a
participant will have the right to exercise all or any part of
his or her award, including shares as to which the award would
not otherwise be exercisable. In addition, the administrator may
provide that any Company repurchase option applicable to any
shares purchased upon exercise of an award will lapse as to all
such shares, provided the proposed dissolution or liquidation
takes place at the time and in the manner contemplated.
Merger or Change of Control. In connection with a merger
of Plantronics with or into another corporation, or a
change of control, as defined in the Plan, each
outstanding award will be assumed or substituted for by the
successor corporation (or a parent or subsidiary or such
successor corporation). If there is no assumption or
substitution of outstanding awards, the administrator will
notify the participant that he or she has the right to exercise
his or her options, rights to purchase restricted stock, and
stock appreciation rights as to all of the shares subject to the
award for a period of 15 days from the date of such notice
and that the award will terminate upon the expiration of such
period; moreover, all restrictions on restricted stock and all
performance goals or other vesting requirements for restricted
stock units will lapse.
Amendment and Termination of the Plan. The Board may
amend the Plan at any time or from time to time or may terminate
the Plan without approval of the stockholders; provided,
however, that stockholder approval is required for any amendment
to the Plan for which stockholder approval would be required
under applicable law or regulation (including the requirements
of The New York Stock Exchange), as in effect at the time.
However, the Board may not, without the approval of the
stockholders, (i) materially increase the number of shares
issuable under the Plan (unless such increase is made as an
adjustment to a change in Plantronics capitalization),
(ii) materially modify the requirements for eligibility to
participate in the Plan, or (iii) reprice options or stock
appreciation rights. The Plan will terminate on
September 23, 2013, unless terminated sooner by the Board.
Any award outstanding under the Plan at the time of its
termination will remain outstanding until they expire by their
terms.
Federal Tax Aspects
The following paragraphs are a summary of the general federal
income tax consequences to U.S. taxpayers and Plantronics
of awards granted under the Plan. Tax consequences for any
particular individual may be different.
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Nonstatutory Stock Options. |
No taxable income is reportable when a nonqualified stock option
with an exercise price equal to the fair market value of the
Companys stock is granted to a participant. Upon exercise,
the participant will recognize ordinary income in an amount
equal to the excess of the fair market value (on the exercise
date) of the shares purchased over the exercise price of the
option. Any additional gain or loss recognized upon any later
disposition of the shares would be capital gain or loss.
No taxable income is reportable when an incentive stock option
is granted or exercised (except for purposes of the alternative
minimum tax, in which case taxation is the same as for
nonstatutory stock options). If the participant exercises the
option and then later sells or otherwise disposes of the shares
more than two years after the grant date and more than one year
after the exercise date, the difference between the sale price
and the exercise price will be taxed as capital gain or loss. If
the participant exercises the option and then later sells or
otherwise disposes of the shares before the end of the two-or
one-year holding periods described above, he or she generally
will have ordinary income at the time of the sale equal to the
fair market value of the shares on the exercise date (or the
sale price, if less) minus the exercise price of the option.
18
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Stock Appreciation Rights. |
No taxable income is reportable when a stock appreciation right
with an exercise price equal to the fair market value of the
Companys stock is granted to a participant. Upon exercise,
the participant will recognize ordinary income in an amount
equal to the amount of cash received and the fair market value
of any shares received. Any additional gain or loss recognized
upon any later disposition of the shares would be capital gain
or loss.
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Restricted Stock and Restricted Stock Units. |
A participant generally will not have taxable income at the time
an award of restricted stock or restricted stock units are
granted. Instead, he or she will recognize ordinary income in
the first taxable year in which his or her interest in the
shares underlying the award becomes either (a) freely
transferable or (b) no longer subject to substantial risk
of forfeiture. However, the recipient of a restricted stock
award (but not an award of restricted stock units) may elect to
recognize income at the time he or she receives the award in an
amount equal to the fair market value of the shares underlying
the Award (less any cash paid for the shares) on the date the
award is granted.
Section 409A of the Code, which was added by the American
Jobs Creation Act of 2004, provides certain new requirements on
non-qualified deferred compensation arrangements. These include
new requirements with respect to an individuals election
to defer compensation and the individuals selection of the
timing and form of distribution of the deferred compensation.
Section 409A also generally provides that distributions
must be made on or following the occurrence of certain events
(e.g., the individuals separation from service, a
predetermined date, or the individuals death).
Section 409A imposes restrictions on an individuals
ability to change his or her distribution timing or form after
the compensation has been deferred. For certain individuals who
are officers, Section 409A requires that such
individuals distribution commence no earlier than six
months after such officers separation from service.
Awards granted under the Plan with a deferral feature will be
subject to the requirements of Section 409A. If an award is
subject to and fails to satisfy the requirements of
Section 409A, the recipient of that award may recognize
ordinary income on the amounts deferred under the award, to the
extent vested, which may be prior to when the compensation is
actually or constructively received. Also, if an award that is
subject to Section 409A fails to comply with
Section 409As provisions, Section 409A imposes
an additional 20% federal income tax on compensation recognized
as ordinary income, as well as interest on such deferred
compensation. The Internal Revenue Service has not issued final
regulations under Section 409A and, accordingly, the
requirements of Section 409A (and the application of those
requirements to Awards issued under the Plan) are not entirely
clear.
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Tax Effect for the Company. |
The Company generally will be entitled to a tax deduction in
connection with an award under the Plan in an amount equal to
the ordinary income realized by a participant and at the time
the participant recognizes such income (for example, the
exercise of a nonstatutory stock option). Special rules limit
the deductibility of compensation paid to Plantronics
Chief Executive Officer and to each of its four most highly
compensated executive officers. Under Section 162(m) of the
Code, the annual compensation paid to any of these specified
executives will be deductible only to the extent that it does
not exceed $1,000,000. However, Plantronics can preserve the
deductibility of certain compensation in excess of $1,000,000 if
the conditions of Section 162(m) are met. The Plan has been
designed to permit the administrator to grant awards that
qualify as performance-
19
based for purposes of satisfying the conditions of
Section 162(m), thereby permitting Plantronics to continue
to receive a federal income tax deduction in connection with
such awards.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL
INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY WITH RESPECT
TO THE GRANT AND EXERCISE OF AWARDS UNDER THE PLAN. IT DOES NOT
PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX
CONSEQUENCES OF A SERVICE PROVIDERS DEATH OR THE
PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR
FOREIGN COUNTRY IN WHICH THE SERVICE PROVIDER MAY RESIDE.
20
Number of Awards Granted to Employees, Consultants, and
Directors
The number of awards that an employee, director or consultant
may receive under the Plan is in the discretion of the
Compensation Committee of the Board of Directors and therefore
cannot be determined in advance. To date, only restricted stock
awards and stock options have been granted under the Plan.
The following table sets forth (a) the aggregate number of
shares subject to options granted under the Plan during the
fiscal year ended March 31, 2006, (b) the average per
share exercise price of such options, and (c) the fair
market value of the number of unvested restricted stock award
shares at year end based on the market value of Plantronics
common stock at April 1, 2006 of $35.43.
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Average Per Share | |
|
Number of | |
|
Restricted Stock | |
Name of Individual or Group Position |
|
Exercise Price | |
|
Options Granted | |
|
Awards(4) | |
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| |
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| |
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| |
Ken Kannappan
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$ |
27.16 |
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24,000 |
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$ |
1,061,289 |
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Director, President and CEO |
|
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Philip Vanhoutte
|
|
|
|
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|
|
0 |
|
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464,888 |
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Managing Director EMEA |
|
|
|
|
|
|
|
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|
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Joyce Shimizu
|
|
|
|
|
|
|
0 |
|
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421,498 |
|
|
Vice President & General Manager |
|
|
|
|
|
|
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Home & Home Office |
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Mark Breier
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|
0 |
|
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370,139 |
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Senior Vice President, Chief Marketing Officer |
|
|
|
|
|
|
|
|
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Terry Walters
|
|
|
|
|
|
|
0 |
|
|
|
565,835 |
|
|
Senior Vice President Operations |
|
|
|
|
|
|
|
|
|
|
|
|
Executive Group(1)
|
|
$ |
27.16 |
|
|
|
24,000 |
|
|
|
2,883,649 |
|
Non-Executive Director Group(2)
|
|
$ |
33.43 |
|
|
|
39,000 |
|
|
|
0 |
|
Non-Executive Officer Employee Group(3)
|
|
$ |
31.10 |
|
|
|
952,350 |
|
|
|
8,310,418 |
|
|
|
(1) |
The Executive Group is composed of the Named Executive Officers. |
|
(2) |
The Non-Executive Director Group is composed of all Plantronics
Board of Directors except Ken Kannappan. |
|
(3) |
The Non-Executive Officer Employee Group is composed of all
Plantronics employees worldwide minus the Executive Group. The
Non-Executive Officer Employee Group average per share exercise
price is calculated as a weighted average. |
|
(4) |
Based on market value of Plantronics common stock at
April 1, 2006 of $35.43, net of consideration paid ($0.01),
multiplied by the number of unvested restricted stock award
shares at year end. |
21
PROPOSAL THREE
APPROVAL OF AN INCREASE IN SHARES ISSUABLE UNDER
THE 2002 EMPLOYEE STOCK PURCHASE PLAN
Plantronics is seeking stockholder approval of an amendment of
the 2002 Employee Stock Purchase Plan (the 2002
ESPP) to increase the number of shares issuable under
the 2002 ESPP. The 2002 ESPP was adopted by our Board of
Directors (the Board) and approved by
Plantronics stockholders in July 2002. The 2002 ESPP
originally authorized the issuance of 200,000 shares and
was subsequently amended, with the approval of Plantronics
stockholders to increase the shares issuable under the
2002 ESPP by 300,000 shares. As of April 30, 2006,
170,905 shares were available for future purchases. Without
a further increase, the 2002 ESPP would run out of shares.
Therefore, we believe an increase is prudent to make available
sufficient shares for issuance under this plan on an ongoing
basis. On March 8, 2006, the Board approved an increase of
200,000 shares issuable under the 2002 ESPP, subject to
stockholder approval. On June 1, 2006, the closing price of
a share of Plantronics common stock on the NYSE was $22.28.
The Board believes that the 2002 ESPP is an important component
of our total employee benefit package and that it is in the best
interest of Plantronics and our stockholders for the
stockholders to approve the proposed increase in shares
available for purchase by employees under the 2002 ESPP. If our
stockholders approve the increase of shares under the 2002 ESPP,
the total number of shares of Common Stock available for future
purchases under the 2002 ESPP will be 370,905.
The following is a summary of the principal features of the 2002
ESPP and its operation. The following summary is qualified in
its entirety by reference to the 2002 ESPP as set forth in
Appendix D, attached hereto.
General. The purpose of our 2002 ESPP is to provide
employees with an opportunity to purchase our common stock
through payroll deductions.
Administration. The 2002 ESPP may be administered by the
Board or a committee appointed by the Board, referred to as the
administrator. All questions of interpretation or application of
the 2002 ESPP are determined by the administrator, and its
decisions are final, conclusive and binding upon all
participants.
Term of the Plan. The 2002 ESPP became effective
June 10, 2002, the date that it was adopted by our Board,
and will continue for a term of 10 years unless sooner
terminated by the Board.
Eligibility. Each of our employees or the employees of
our designated subsidiaries who is customarily employed for at
least 20 hours per week and more than 5 months in a
calendar year is eligible to participate in the 2002 ESPP. The
exceptions to this guideline are that no employee shall be
granted an option under the 2002 ESPP (i) to the extent
that, immediately after the grant, such employee would own 5% of
either the voting power or value of our stock or any of our
subsidiaries, or (ii) to the extent that his or her rights
to purchase stock under all of our employee stock purchase plans
or those of our subsidiaries accrues at a rate which exceeds
$25,000 worth of stock (determined at the fair market value of
the shares at the time such option is granted) for each calendar
year.
Shares Subject to the Plan. The maximum number of shares
of our common stock available for sale under the 2002 ESPP as of
April 30, 2006 is 170,905 shares, subject to
adjustment upon changes in capitalization as described below. On
March 8, 2006, the Board approved an increase of
200,000 shares issuable under the 2002 ESPP, subject to
stockholder approval.
Offering Period. The 2002 ESPP is implemented by
consecutive offering periods lasting approximately 6 months
in duration with a new offering period commencing on
February 1 and August 1 of each year. To participate
in the 2002 ESPP, each eligible employee must authorize payroll
deductions pursuant to the 2002 ESPP. Such payroll deductions
may not exceed 10% of a participants compensation.
Compensation is defined as base straight time gross earnings,
but exclusive of payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses, commissions, car
allowances, profit-sharing and other compensation. Our Board has
the power to change the duration of future offering periods
without stockholder approval if such change is announced at
least 15 days prior to the scheduled beginning of the first
offering period to be affected thereafter. Once an employee
becomes a participant in the 2002 ESPP, our common stock will
22
automatically be purchased under the 2002 ESPP at the end of
each offering period, unless the participant withdraws or
terminates employment earlier.
Purchase Price. Shares of our common stock may be
purchased under the 2002 ESPP at a purchase price not less than
85% of the lesser of the fair market value of our common stock
on (i) the first day of the offering period or
(ii) the last day of the offering period. The fair market
value of our common stock on any relevant date will be the
closing price per share as reported on the New York Stock
Exchange, or the mean of the closing bid and asked prices, if no
sales were reported, as quoted on such exchange or reported in
The Wall Street Journal.
Payment of Purchase Price; Payroll Deductions. The
purchase price of the shares is accumulated by payroll
deductions throughout each offering period. The number of shares
of our common stock a participant may purchase in each offering
period is determined by dividing the total amount of payroll
deductions withheld from the participants compensation
during that offering period by the purchase price; provided,
however, that a participant may not purchase more than
1,000 shares each offering. During the offering period, a
participant may discontinue his or her participation in the
employee stock purchase plan, and may, on one occasion during
the offering period, decrease (but not increase) the rate of
payroll deductions in an offering period within limits set by
the administrator. All payroll deductions made for a participant
are credited to the participants account under the 2002
ESPP, are withheld in whole percentages only and are included
with our general funds. Funds received by us pursuant to
exercises under the 2002 ESPP are also used for general
corporate purposes. A participant may not make any additional
payments into his or her account.
Withdrawal. Generally, a participant may withdraw from an
offering period at any time by written notice without affecting
his or her eligibility to participate in future offering
periods. However, once a participant withdraws from a particular
offering period, that participant may not participate again in
the same offering period. To participate in a subsequent
offering period, the participant must deliver to us a new
subscription agreement.
Transferability. Neither payroll deductions credited to a
participants account nor any rights with regard to the
exercise of an option or to receive shares under the 2002 ESPP
may be assigned, transferred, pledged or otherwise disposed of
in any way other than by will, the laws of descent and
distribution.
Termination of Employment. Upon termination of a
participants employment for any reason, including
disability or death, his or her option and participation in the
2002 ESPP will terminate. At such time, the payroll deductions
credited to the participants account (to the extent not
used to make a purchase of our common stock) will be returned to
him or her or, in the case of death, to the person or persons
entitled thereto as provided in the 2002 ESPP.
Adjustments upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
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Changes in Capitalization. Subject to any required action
by our stockholders, the number of shares reserved under the
2002 ESPP, the number of shares that may be added to the 2002
ESPP on an annual basis, the maximum number of shares that may
be purchased during any offering period, as well as the price
per share of common stock covered by each option under the 2002
ESPP which has not yet been exercised shall be proportionately
adjusted for any increase or decrease in the number of issued
shares of common stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of
the common stock, or any other increase or decrease in the
number of shares of common stock effected without receipt of
consideration by us; provided, however, that conversion of any
of our convertible securities shall not be deemed to have been
effected without receipt of consideration. Such
adjustment shall be made by our Board, whose determination in
that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by us of shares of stock
of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of
common stock subject to an option. |
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Dissolution or Liquidation. In the event of our proposed
dissolution or liquidation, the Board shall shorten any offering
periods then in progress by setting a new exercise date and any
offering periods shall end on the new exercise date. The new
exercise date shall be prior to the dissolution or liquidation.
If the |
23
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Board shortens any offering periods then in progress, the Board
shall notify each participant in writing, at least 10 business
days prior to the new exercise date, that the exercise date has
been changed to the new exercise date and that the option will
be exercised automatically on the new exercise date, unless the
participant has already withdrawn from the offering period. |
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Merger or Asset Sale. In the event of a proposed sale of
all or substantially all of our assets or the merger of us with
or into another corporation, each option under the 2002 ESPP
shall be assumed or an equivalent option shall be substituted by
such successor corporation or a parent or subsidiary of such
successor corporation. In the event the successor corporation
refuses to assume or substitute for the options, the Board shall
shorten any offering periods then in progress by setting a new
exercise date and any offering periods shall end on the new
exercise date. The new exercise date shall be prior to the date
of the sale or merger. If the Board shortens any offering
periods then in progress, the Board shall notify each
participant in writing, at least 10 business days prior to the
new exercise date, that the exercise date has been changed to
the new exercise date and that the option will be exercised
automatically on the new exercise date, unless the participant
has already withdrawn from the offering period. |
Amendment and Termination of the Plan. Our Board may at
any time terminate or amend the 2002 ESPP. An offering period
may be terminated by the Board at the end of any offering period
if the Board determines that termination of the 2002 ESPP is in
our best interests and the best interests of our stockholders.
Generally, no such termination can affect options previously
granted. No amendment shall be effective unless it is approved
by the holders of a majority of the votes cast at a duly held
stockholders meeting, if such amendment would require
stockholder approval in order to comply with Section 423 of
the Code.
Certain Federal Income Tax Information. The following
brief summary of the effect of federal income taxation upon the
participant and us with respect to the shares purchased under
the 2002 ESPP does not purport to be complete, and does not
discuss the tax consequences of a participants death or
the income tax laws of any state or foreign country in which the
participant may reside.
The 2002 ESPP, and the right of participants to make purchases
thereunder, is intended to qualify under the provisions of
Sections 421 and 423 of the Code. Under these provisions,
no income will be taxable to a participant until the shares
purchased under the 2002 ESPP are sold or otherwise disposed of.
Upon sale or other disposition of the shares, the participant
will generally be subject to tax in an amount that depends upon
the holding period. If the shares are sold or otherwise disposed
of more than 2 years from the first day of the applicable
offering period and 1 year from the applicable date of
purchase, the participant will recognize ordinary income
measured as the lesser of (a) the excess of the fair market
value of the shares at the time of such sale or disposition over
the purchase price, or (b) an amount equal to 15% of the
fair market value of the shares as of the first day of the
applicable offering period. Any additional gain will be treated
as long-term capital gain. If the shares are sold or otherwise
disposed of before the expiration of these holding periods, the
participant will recognize ordinary income generally measured as
the excess of the fair market value of the shares on the date
the shares are purchased over the purchase price. Any additional
gain or loss on such sale or disposition will be long-term or
short-term capital gain or loss, depending on how long the
shares have been held from the date of purchase. We generally
are not entitled to a deduction for amounts taxed as ordinary
income or capital gain to a participant except to the extent of
ordinary income recognized by participants upon a sale or
disposition of shares prior to the expiration of the holding
periods described above.
Vote Required
The affirmative vote of a majority of the shares present in
person or by proxy and entitled to vote at the Annual Meeting
will be required to approve the amendment to the 2002 ESPP.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR APPROVAL OF A 200,000 SHARE
INCREASE IN SHARES ISSUABLE UNDER THE 2002 EMPLOYEE STOCK
PURCHASE PLAN.
24
Number of Shares Purchased by Certain Individuals and
Groups
Given that the number of shares of common stock that may be
purchased under the 2002 ESPP is determined, in part, on the
stocks market value on the first and last day of the
offering period and given that participation in the 2002 ESPP is
voluntary on the part of employees, the actual number of shares
that may be purchased by any individual is not determinable. For
illustrative purposes, the following table sets forth
(a) the number of Shares that were purchased during fiscal
2006 under the 2002 ESPP, and the (b) average price per
Share purchase price paid for such Shares.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares | |
|
Average Per Share | |
Name of Individual or Group |
|
Purchased | |
|
Purchase Price | |
|
|
| |
|
| |
Ken Kannappan
Director, President and CEO
|
|
|
725 |
|
|
$ |
29.32 |
|
Philip Vanhoutte
Managing Director EMEA
|
|
|
0 |
|
|
|
N/A |
|
Joyce Shimizu
Vice President & General Manager
Home & Home Office
|
|
|
0 |
|
|
|
N/A |
|
Mark Breier
Senior Vice President, Chief Marketing Officer
|
|
|
960 |
|
|
$ |
29.18 |
|
Terry Walters
Senior Vice President Operations
|
|
|
0 |
|
|
|
N/A |
|
All executive officers, as a group(1)
|
|
|
6,433 |
|
|
$ |
29.19 |
|
All directors who are not executive officers, as a group(2)
|
|
|
0 |
|
|
|
N/A |
|
All employees who are not executive officers, as a group(3)
|
|
|
85,453 |
|
|
$ |
29.18 |
|
|
|
(1) |
The Executive Group is composed of the all Executive Officers. |
|
(2) |
The Non-Executive Director Group is composed of all Plantronics
Board of Directors except Ken Kannappan. Directors who are not
employees of the Company are not eligible to participate in the
ESPP. |
|
(3) |
The Non-Executive Officer Employee Group is composed of all
Plantronics employees worldwide minus the Executive Group. The
Non-Executive Officer Employee Group average per share exercise
price is calculated as a weighted average. |
Equity Compensation Plan Information
The following table sets forth information with respect to
Plantronics equity compensation plans as of the end of the
most recently completed fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) | |
|
(b) | |
|
(c) | |
|
|
| |
|
| |
|
| |
|
|
|
|
|
|
Number of securities | |
|
|
|
|
|
|
remaining available for | |
|
|
Number of securities to | |
|
Weighted-average | |
|
future issuance under | |
|
|
be issued upon exercise | |
|
exercise price of | |
|
equity compensation plans | |
|
|
of outstanding options, | |
|
outstanding options, | |
|
(excluding securities | |
Plan Category |
|
warrants and rights | |
|
warrants and rights | |
|
reflected in column (a)) | |
|
|
| |
|
| |
|
| |
Equity compensation plans approved by security holders(1)
|
|
|
8,147,972 |
|
|
$ |
26.64 |
|
|
|
547,808 |
|
Equity compensation plans not approved by security holders(2)
|
|
|
129,000 |
|
|
|
33.49 |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
8,276,972 |
|
|
$ |
26.75 |
|
|
|
547,808 |
|
|
|
|
|
|
|
|
|
|
|
25
|
|
(1) |
Includes the 1993 Stock Option Plan, the 1993 Director
Stock Option Plan, and the 2003 Stock Plan, but does not include
the 2002 ESPP and the additional 1.8 million shares for
which stockholder approval is being sought at this Annual
Meeting for the 2003 Stock Plan. |
|
(2) |
Granted as a material inducement of employment to former
employees of Altec Lansing in connection with the
Plantronics acquisition of Altec Lansing. The material
features of this plan are substantially the same as those of
Plantronics 2003 Stock Plan and are fully described in the
Form S-8 filed by
Plantronics with the U.S. Securities & Exchange
Commission on August 18, 2005. |
26
PROPOSAL FOUR
APPROVAL OF OUR PERFORMANCE BONUS PLAN
On June 2, 2006, our Compensation Committee unanimously
approved the Plantronics, Inc. Regular, Supplemental and Over
Achievement Performance Bonus Plan (the Bonus Plan)
and directed that the Bonus Plan be submitted to shareholders at
the Annual Meeting.
The purpose of the Bonus Plan is to motivate certain executives
to achieve corporate or business unit performance objectives and
to reward them when those objectives are satisfied.
Description of the Performance Bonus Plan
Eligibility. Participants in the Bonus Plan are executive
officers and key employees who are chosen solely at the
discretion of the Compensation Committee. Our Chief Executive
Officer, all of our Presidents, all of our Senior Vice
Presidents, our Managing Director of Europe, Middle East and
Africa and certain of our Vice Presidents are eligible to be
considered for participation in the Bonus Plan. As of
June 2, 2006, there were 14 persons chosen to participate
for fiscal year 2007. Because our executive officers are
eligible to receive awards under the Bonus Plan, our executive
officers have an interest in this proposal. No person is
automatically entitled to participate in the Bonus Plan in any
Bonus Plan year. Plantronics may also pay discretionary bonuses,
or other types of compensation, outside of the Bonus Plan.
Purpose. The purpose of the Bonus Plan is to motivate the
participants to achieve our corporate and business unit
performance objectives and to reward them when those objectives
are satisfied. If certain requirements are satisfied, bonuses
issued under the Plan may qualify as deductible
performance-based compensation within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code).
Administration. The Bonus Plan will be administered by
the Compensation Committee, consisting of no fewer than two
members of the Board. With respect to incentive compensation
that is intended to qualify as performance-based
compensation within the meaning of Code
Section 162(m), each member of the Compensation Committee
who does not qualify as an outside director within
the meaning of Section 162(m) of the Code will recuse
themselves or abstain from acting with respect to Bonus Plan
determinations and at least two members of the Compensation
Committee who do qualify as outside directors shall
make Bonus Plan determinations.
Determination of Awards. Under the Bonus Plan,
participants will be eligible to receive awards based upon the
attainment and certification of certain performance criteria
established by the Compensation Committee. The performance
criteria the Compensation Committee may choose from may include
one or more of the following:
|
|
|
|
|
annual revenue, |
|
|
|
cash position, |
|
|
|
earnings per share, |
|
|
|
net income, |
|
|
|
operating cash flow, |
|
|
|
operating income, |
|
|
|
return on assets, |
|
|
|
return on equity, |
|
|
|
return on sales, |
|
|
|
total shareholder return, or |
|
|
|
individual performance objectives. |
27
The performance criteria may differ for each participant and for
each award. Performance criteria may apply to Plantronics or to
one of our business units. Any individual performance objectives
must relate to an objective that is objectively determinable
within the meaning of Code Section 162(m). For example,
individual performance objectives may include objectively
measurable improvement in Plantronics customer satisfaction.
Our Compensation Committee retains the discretion to reduce or
eliminate any award that would otherwise be payable pursuant to
the Bonus Plan.
Payment of Awards. All awards will be paid in cash as
soon as is practicable following determination of the award,
unless Plantronics establishes a plan to permit deferral of
bonus amounts, in which case awards will be paid pursuant to the
timing requirements of that plan and applicable law. The
Committee may also defer the payment of awards in its
discretion, as necessary or desirable to preserve the
deductibility of such awards under Code Section 162(m).
Maximum Award. The amounts that will be paid pursuant to
the Bonus Plan are not currently determinable. The maximum bonus
payment that any participant may receive under the Bonus Plan in
any of our fiscal years is $2,000,000.
Amendment and Termination. The Compensation Committee may
amend, suspend or terminate the Bonus Plan, in whole or in part,
at any time, including the adoption of amendments deemed
necessary or desirable to correct any defect or supply omitted
data or reconcile any inconsistency in the Bonus Plan or in any
award granted thereunder. The Compensation Committee may amend
or modify the Bonus Plan in any respect, or terminate the Bonus
Plan, without the consent of any affected participant. However,
in no event may such amendment or modification result in an
increase in the amount of compensation payable pursuant to any
award.
Indemnification. Our Board of Directors and Compensation
Committee are generally indemnified by Plantronics for any
liability arising from claims relating to the Bonus Plan.
Federal Income Tax Consequences. Under present federal
income tax law, participants will recognize ordinary income
equal to the amount of the award received in the year of
receipt. That income will be subject to applicable income and
employment tax withholding by Plantronics. If and to the extent
that the Bonus Plan payments satisfy the requirements of
Section 162(m) of the Code and otherwise satisfy the
requirements for deductibility under federal income tax law, we
will receive a deduction for the amount constituting ordinary
income to the participant.
Awards to be Granted to Certain Individuals and Groups.
Awards under the Bonus Plan are determined based on actual
future performance, so future actual awards cannot now be
determined.
Incorporation of Existing Plans. We intend to incorporate
our existing Regular, Supplemental and Over Achievement Bonus
Plans into this Plan if it is approved by stockholders. This
Plan is not intended to be an additional bonus plan.
Vote Required
Approval of the Bonus Plan requires the affirmative vote of the
holders of a majority of shares of common stock present or
represented and entitled to vote on this matter at the Annual
Meeting. Abstentions and broker non-votes will be counted as
present for purposes of determining whether a quorum is present,
and shares subject to broker non-votes on this matter will not
be treated as being entitled to vote on this matter at the
Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR APPROVAL OF THE PERFORMANCE
BONUS PLAN.
28
PROPOSAL FIVE
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board has selected
PricewaterhouseCoopers LLP
(PricewaterhouseCoopers), independent
registered public accounting firm, to audit the consolidated
financial statements of Plantronics for fiscal 2007. The Board
of Directors recommends that stockholders vote for ratification
of such appointment. If this Proposal is not approved, the Audit
Committee will reconsider its selection.
PricewaterhouseCoopers has audited Plantronics financial
statements annually since 1988. A representative of
PricewaterhouseCoopers will be available at the Annual Meeting
to respond to questions. The PricewaterhouseCoopers
representative will have an opportunity to make a statement at
the Annual Meeting if they desire to do so.
Audit and Related Fees
The following is a summary of pre-approved fees and services
approved by the Audit Committee and performed by our independent
registered public accounting firm for the years ended
March 31, 2005 and 2006.
Audit Fees. The aggregate fees billed to us in each of
fiscal 2005 and fiscal 2006 for professional services rendered
by PricewaterhouseCoopers LLP for (i) the audit of our
annual financial statements included in our
Form 10-K;
(ii) review of our interim financial statements included in
the quarterly reports on
Form 10-Q;
(iii) services rendered by PricewaterhouseCoopers LLP in
connection with the audit of managements report on the
effectiveness of our internal control over financial reporting,
as required by Section 404 of the Sarbanes Oxley Act of
2002 and (iv) consents and assistance in connection with
other filings, including statutory audits and services, and
public offering documents filed with the Securities and Exchange
Commission were:
|
|
|
|
|
Fiscal Year ended March 31, 2005
|
|
$ |
1,838,521 |
|
Fiscal Year ended March 31, 2006
|
|
$ |
2,075,714 |
|
Audit fees for fiscal 2006 include audit related fees associated
with the acquisition of Altec Lansing Technologies, Inc. for
approximately $380,000. Amounts are accumulated based on the
fiscal year for which the service is provided and not the year
in which the services are rendered. Certain amounts have been
estimated pending completion of statutory audits or accumulation
of actual billing information.
Audit-Related Fees. The aggregate fees billed to us in
fiscal 2006 for professional services rendered by
PricewaterhouseCoopers LLP for advisory work of Section 404
of the Sarbanes Oxley Act of 2002 were:
|
|
|
|
|
Fiscal Year ended March 31, 2005
|
|
$ |
92,277 |
|
Fiscal Year ended March 31, 2006
|
|
$ |
0 |
|
Tax Fees. The aggregate fees billed to us in each of
fiscal 2005 and fiscal 2006 for professional services rendered
by PricewaterhouseCoopers LLP for tax compliance, tax advice and
tax planning were:
|
|
|
|
|
Fiscal Year ended March 31, 2005
|
|
$ |
352,276 |
|
Fiscal Year ended March 31, 2006
|
|
$ |
222,392 |
|
All Other Fees. The aggregate fees billed to us in each
of fiscal 2005 and fiscal 2006 for products and services
provided by PricewaterhouseCoopers LLP, which include services
provided in connection with acquisitions of $85,700, except
those included above under the captions Audit Fees,
Audit-Related Fees and Tax Fees were:
|
|
|
|
|
Fiscal Year ended March 31, 2005
|
|
$ |
70,531 |
|
Fiscal Year ended March 31, 2006
|
|
$ |
106,704 |
|
Our Audit Committee believes that the services rendered by
PricewaterhouseCoopers that led to the fees detailed under the
captions Audit Fees, Tax Fees and
All Other Fees are compatible with maintaining
PricewaterhouseCoopers independence.
29
Our Audit Committee has adopted pre-approval policies or
procedures, so that all fees for services expected to be
rendered by our independent registered public accounting firm
are pre-approved by the Audit Committee. All of the services
performed by PricewaterhouseCoopers referenced above were
pre-approved by our Audit Committee.
Vote Required
Approval of the ratification of the appointment of
PricewaterhouseCoopers as the independent registered public
accounting firm requires the affirmative vote of the holders of
a majority of the shares of the Companys common stock that
are present in person or by proxy and entitled to vote at the
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS AS THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
30
ADDITIONAL INFORMATION
Security Ownership of Principal Stockholders and
Management
The following table sets forth certain information with respect
to beneficial ownership of common stock of Plantronics as of
April 30, 2006 as to (i) each person who is known by
Plantronics to own beneficially more than 5% of the outstanding
shares of common stock, (ii) each Director and each nominee
for Director of Plantronics, (iii) the Chief Executive
Officer and each of the four other most highly compensated
executive officers of Plantronics (the Chief Executive Officer
and such other officers collectively the Named
Executive Officers), and (iv) all Directors and
Executive Officers as a group. Except as otherwise indicated, we
believe that the beneficial owners of the common stock listed
below have sole investment and voting power with respect to such
shares, subject to community property laws.
Security Ownership of Principal Stockholders and
Management
|
|
|
|
|
|
|
|
|
|
|
Amount and | |
|
|
|
|
Nature of | |
|
|
|
|
Beneficial | |
|
Percentage of | |
Name and Address of Beneficial Owner (1) |
|
Ownership (2) | |
|
Class (3) | |
|
|
| |
|
| |
PRIMECAP Management Company(4)
225 South Lake Ave., Suite 400
Pasadena, CA 91101-3005
|
|
|
5,880,750 |
|
|
|
12.4 |
% |
AMVESCAP PLC(5)
30 Finsbury Square
London EC2A 1AG
England
|
|
|
4,135,340 |
|
|
|
8.7 |
% |
FMR Corp.(6)
82 Devonshire Street,
Boston, Massachusetts 02109
|
|
|
3,185,300 |
|
|
|
6.7 |
% |
Ken Kannappan
|
|
|
1,073,998 |
|
|
|
2.2 |
% |
Trude Taylor
|
|
|
210,677 |
|
|
|
* |
|
Joyce Shimizu
|
|
|
142,000 |
|
|
|
* |
|
Mark Breier
|
|
|
136,820 |
|
|
|
* |
|
Terry Walters
|
|
|
116,406 |
|
|
|
* |
|
Philip Vanhoutte
|
|
|
97,500 |
|
|
|
* |
|
Marv Tseu
|
|
|
32,437 |
|
|
|
* |
|
Roger Wery
|
|
|
23,437 |
|
|
|
* |
|
Gregg Hammann
|
|
|
12,000 |
|
|
|
* |
|
Marshall Mohr
|
|
|
3,000 |
|
|
|
* |
|
John Hart(7)
|
|
|
0 |
|
|
|
* |
|
All Directors and All Executive Officers as a group (20 persons)
|
|
|
2,936,605 |
|
|
|
5.9 |
% |
|
|
(1) |
Unless otherwise indicated, the address for each person and
entity named in the table is c/o Plantronics, Inc., 345
Encinal Street, Santa Cruz, CA 95060. |
|
(2) |
Includes stock underlying stock options held by Directors and
Named Executive Officers that are exercisable within
60 days of April 30, 2006, as follows:
Mr. Kannappan, 1,014,266 shares; Mr. Taylor,
20,437 shares; Ms. Shimizu, 129,000 shares;
Mr. Breier, 125,000 shares; Mr. Walters,
97,050 shares; Mr. Vanhoutte, 82,500; Mr. Tseu,
26,437 shares; Mr. Wery, 23,437 shares;
Mr. Hammann, 12,000 shares; Mr. Mohr,
3,000 shares and Mr. Hart, 0 shares. All
Directors and All Executive Officers as a group (20 persons),
2,500,328 shares. |
|
(3) |
For each person and group included in the table, percentage
ownership is calculated by dividing the number of shares
beneficially owned by such person or group as described above by
the sum of the |
31
|
|
|
47,554,101 shares of common stock outstanding on
April 30, 2006 and the number of shares of common stock
that such person or group had the right to acquire on or within
60 days of April 30, 2006 as set forth in footnote
(2) above. |
|
(4) |
As of December 31, 2005, PRIMECAP Management Company
(PRIMECAP) claims sole dispositive power and neither
sole nor shared voting power as to the 5,880,750 shares,
based solely upon PRIMECAPs Schedule 13G filed on
February 14, 2006. PRIMECAP has informed Plantronics that
4,701,500 of these 5,880,750 shares were held by the
Vanguard Chester Funds Vanguard PRIMECAP Fund, which
is managed by PRIMECAP. In Amendment 12 to Schedule 13G filed
March 9, 2006, Vanguard Chester Funds Vanguard
PRIMECAP Fund, 100 Vanguard Blvd., Malvern, PA 19355, reported
that, as of February 28, 2006, it had sole voting power
over 4,701,500 of these shares and neither sole nor shared
dispositive power over any of these shares. |
|
(5) |
As of December 31, 2005, AMVESCAP PLC claims sole
dispositive power and sole voting power as to the
4,135,340 shares. Information provided herein is based
solely upon AMVESCAP PLCs Schedule 13G filed on
February 13, 2006. |
|
(6) |
As of December 31, 2005, FMR Corp. claims sole dispositive
power as to the 3,185,300 shares, sole voting power over
357,500 of these shares and shared voting power over none of
these shares. Information provided herein is based solely upon
FMR Corp.s Schedule 13G filed on February 14,
2006. |
|
(7) |
On March 8, 2006, Mr. Hart received an option to
purchase 12,000 shares of Common Stock at the exercise
price of $34.27 as a result of being appointed as a new Director
of Plantronics. |
Executive Compensation
The following table sets forth the compensation paid by
Plantronics for fiscal 2004, 2005 and 2006 to the Chief
Executive Officer and each of the four other most highly
compensated executive officers of Plantronics (the CEO and such
other officers collectively the Named Executive
Officers). Plantronics 2006 fiscal year
contained 52 weeks. Plantronics 2005 fiscal year
contained 52 weeks, while Plantronics 2004 fiscal
year contained 53 weeks which is the primary reason that
base salary decreased in comparison to fiscal 2004 for the
officers named below. None of the Named Executive Officers
received an increase in their base pay during the last review
cycle, which was in October 2006, and none received an increase
in the target level of their bonus relative to their base pay.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Compensation | |
|
Long Term Compensation | |
|
|
|
|
|
|
| |
|
| |
|
|
|
|
|
|
|
|
Other Annual | |
|
Restricted Stock | |
|
Securities | |
|
All Other | |
Name and Principal |
|
Fiscal | |
|
|
|
Bonus | |
|
Compensation | |
|
Awards | |
|
Underlying | |
|
Compensation | |
Position |
|
Year | |
|
Salary | |
|
(1) | |
|
(2) | |
|
(3)(4) | |
|
Options | |
|
(5) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Ken Kannappan
|
|
|
2006 |
|
|
$ |
500,002 |
|
|
$ |
151,161 |
|
|
$ |
9,796 |
|
|
$ |
597,300 |
|
|
|
24,000 |
|
|
$ |
26,398 |
|
|
Director, President |
|
|
2005 |
|
|
|
500,002 |
|
|
|
519,716 |
|
|
|
8,420 |
|
|
|
505,875 |
|
|
|
50,000 |
|
|
|
14,217 |
|
|
and CEO |
|
|
2004 |
|
|
|
509,617 |
|
|
|
500,246 |
|
|
|
12,801 |
|
|
|
0 |
|
|
|
100,000 |
|
|
|
12,868 |
|
Philip Vanhoutte(6)
|
|
|
2006 |
|
|
|
286,547 |
|
|
|
172,654 |
|
|
|
22,351 |
|
|
|
271,500 |
|
|
|
0 |
|
|
|
21,742 |
|
|
Managing |
|
|
2005 |
|
|
|
295,324 |
|
|
|
213,847 |
|
|
|
96,576 |
|
|
|
202,350 |
|
|
|
0 |
|
|
|
23,460 |
|
|
Director EMEA |
|
|
2004 |
|
|
|
147,300 |
|
|
|
111,188 |
|
|
|
47,872 |
|
|
|
0 |
|
|
|
150,000 |
|
|
|
12,321 |
|
Joyce Shimizu
|
|
|
2006 |
|
|
|
261,414 |
|
|
|
167,615 |
|
|
|
15,830 |
|
|
|
244,350 |
|
|
|
0 |
|
|
|
24,519 |
|
|
Vice President & General |
|
|
2005 |
|
|
|
261,414 |
|
|
|
204,803 |
|
|
|
13,940 |
|
|
|
161,880 |
|
|
|
25,000 |
|
|
|
12,554 |
|
|
Manager Home & Home Office |
|
|
2004 |
|
|
|
266,441 |
|
|
|
195,563 |
|
|
|
15,854 |
|
|
|
0 |
|
|
|
25,000 |
|
|
|
12,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Breier(7)
|
|
|
2006 |
|
|
|
280,000 |
|
|
|
148,541 |
|
|
$ |
10,451 |
|
|
|
298,650 |
|
|
|
0 |
|
|
|
21,892 |
|
|
Senior Vice President, |
|
|
2005 |
|
|
|
188,462 |
|
|
|
158,919 |
|
|
|
6413 |
|
|
|
0 |
|
|
|
125,000 |
|
|
|
10,265 |
|
|
Chief Marketing Officer |
|
|
2004 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Terry Walters
|
|
|
2006 |
|
|
|
225,000 |
|
|
|
177,431 |
|
|
|
10,787 |
|
|
|
352,950 |
|
|
|
0 |
|
|
|
22,336 |
|
|
Senior Vice |
|
|
2005 |
|
|
|
225,000 |
|
|
|
214,801 |
|
|
|
8,745 |
|
|
|
202,350 |
|
|
|
40,000 |
|
|
|
14,386 |
|
|
President Operations |
|
|
2004 |
|
|
|
221,062 |
|
|
|
140,768 |
|
|
|
10,340 |
|
|
|
0 |
|
|
|
45,000 |
|
|
|
13,378 |
|
|
|
(1) |
Amounts shown are the sum of the components a-d: |
|
|
|
|
a) |
the following contributions by Plantronics under the Quarterly
Profit Sharing Plan for each executive in fiscal 2004, 2005 and
2006 respectively: Mr. Kannappan ($46,867, $52,766,
$36,377), |
32
|
|
|
|
|
Mr. Vanhoutte ($13,216, $31,581, $20,673), Ms. Shimizu
($24,504, $27,587, $19,019), Mr. Breier ($0, $18,562,
$20,371) and Mr. Walters ($20,275, $23,772, $16,370); |
|
|
|
|
b) |
the following contributions by Plantronics under the Over
Achievement Bonus Plan for each executive in fiscal 2004, 2005,
2006 respectively: Mr. Kannappan ($36,677, $50,248, $0),
Mr. Vanhoutte ($10,453, $29,742, $0), Ms. Shimizu
($19,176, $26,041, $0), Mr. Breier ($0, $17,857, $0) and
Mr. Walters ($15,452, $21,009, $0); |
|
|
c) |
the following contributions by Plantronics under the Regular
Bonus Plan for each executive in fiscal 2004, 2005, 2006
respectively: Mr. Kannappan ($145,851, $145,851, $114,784),
Mr. Vanhoutte ($46,730, $90,966, $151,981),
Ms. Shimizu ($108,305, $108,931, $148,596), Mr. Breier
($0, $52,500, $128,170) and Mr. Walters ($69,705, $92,252,
$161,061); and |
|
|
d) |
the following contributions by Plantronics under the
Supplemental Bonus Plan for each executive in fiscal 2004, 2005,
2006 respectively: Mr. Kannappan ($270,851, $270,851, $0),
Mr. Vanhoutte ($40,789, $61,558, $0), Ms. Shimizu
($43,578, $42,244, $0), Mr. Breier ($0, $70,000, $0) and
Mr. Walters ($35,336, $77,768, $0). |
|
|
(2) |
Includes contributions for the Defined Compensation Program, a
supplemental benefit program available only to vice presidents
and above to reimburse participants for items such as medical
co-payments, legal or financial planning services, and a car
allowance. |
|
(3) |
Value is calculated by multiplying the market value of
Plantronics common stock on date of grant, net of consideration
paid ($0.01), by the number of shares awarded. There were no
restricted stock awards in fiscal 2004. |
|
(4) |
The number and value of aggregate restricted stock holdings on
April 1, 2006 for each executive: Mr. Kannappan,
34,500 shares $1,221,990, Mr. Vanhoutte,
15,000 shares $531,300, Ms. Shimizu,
13,000 shares $460,460, Mr. Breier,
10,450 shares $370,139 and Mr. Walters,
17,515 $620,381. Dividends are paid on restricted
stock. |
|
(5) |
Amounts shown include company contributions or other allocations
to defined contribution plans for benefits such as employer
401(k) match payments, pension contributions, and insurance
premiums. Health insurance premiums are included in amounts
shown for 2006, but not for 2004 and 2005. |
|
(6) |
Philip Vanhoutte joined the Company effective September 1,
2003. Mr. Vanhouttes Other Annual
Compensation for 2004 and 2005 includes items such as a
housing allowance and car allowance. |
|
(7) |
Mark Breier joined the Company effective June 28, 2004 |
Option Grants
The following table shows information concerning stock options
granted to the Named Executive Officers during the fiscal year
2006.
Option Grants in Fiscal 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants(1) | |
|
|
|
|
| |
|
Potential Realizable Value | |
|
|
Number of | |
|
% of Total | |
|
|
|
at Assumed Annual Rates | |
|
|
Securities | |
|
Options | |
|
Exercise | |
|
|
|
of Stock Price Appreciation | |
|
|
Underlying | |
|
Granted to | |
|
Or Base | |
|
|
|
for Option Term(2) | |
|
|
Options | |
|
Employees in | |
|
Price | |
|
Expiration | |
|
| |
Name |
|
Granted (#) | |
|
Fiscal Year | |
|
($/sh) | |
|
Date(s) | |
|
5% | |
|
10% | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Ken Kannappan
|
|
|
24,000 |
|
|
|
2.4 |
% |
|
$ |
27.16 |
|
|
|
10/19/12 |
|
|
$ |
265,364 |
|
|
$ |
618,412 |
|
Philip Vanhoutte
|
|
|
0 |
|
|
|
0 |
% |
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
Joyce Shimizu
|
|
|
0 |
|
|
|
0 |
% |
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
Mark Breier
|
|
|
0 |
|
|
|
0 |
% |
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
Terry Walters
|
|
|
0 |
|
|
|
0 |
% |
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
(1) |
These options were granted pursuant to Plantronics 2003
Stock Plan. The option exercise prices were at the fair market
value of Plantronics common stock on the date of grant. All
options expire 7 years from |
33
|
|
|
the date of grant, are generally not transferable by the
participant (other than by will or the laws of descent and
distribution, or to family members), and are exercisable during
the participants lifetime only by the Participant. The
options become exercisable at the rate of 25% of the total grant
12 months after the date of grant and 2.08% of the total
grant each month thereafter. The options are fully vested at
4 years from the date of grant, if the executive is
employed with Plantronics as of that date. |
|
(2) |
Potential realizable values are net of exercise price, but
before taxes associated with exercise. The amounts represent
certain assumed rates of appreciation only, based on SEC rules,
applied for the entire 7 year term of the options. Actual
gains, if any, on stock option exercises are dependent on the
future performance of the common stock, overall market
conditions, the option holders continued employment
through the vesting period, and the date of exercise and sale of
the option shares. The amounts reflected in this table may not
necessarily be achieved and do not reflect Plantronics
estimate of future stock price growth. |
Aggregated Option Exercises and Values
The following table sets forth certain information regarding
option exercises in fiscal 2006 and the value of options held by
the Named Executive Officers.
Aggregated Option Exercises in the Fiscal Year 2006 and
Fiscal Year End Option Values
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
Value of Unexercised In-the- | |
|
|
|
|
|
|
Underlying Unexercised | |
|
Money Options at April 1, | |
|
|
Shares | |
|
|
|
Options At April 1, 2006 | |
|
2006(1) | |
|
|
Acquired on | |
|
Value | |
|
| |
|
| |
Name |
|
Exercise (#) | |
|
Realized ($) | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Ken Kannappan
|
|
|
0 |
|
|
$ |
0 |
|
|
|
987,933 |
|
|
|
143,667 |
|
|
$ |
13,204,866 |
|
|
$ |
1,828,841 |
|
Philip Vanhoutte
|
|
|
0 |
|
|
|
0 |
|
|
|
75,000 |
|
|
|
75,000 |
|
|
|
719,250 |
|
|
|
719,250 |
|
Joyce Shimizu
|
|
|
41,750 |
|
|
|
645,723 |
|
|
|
124,000 |
|
|
|
22,750 |
|
|
|
681,110 |
|
|
|
298,430 |
|
Mark Breier
|
|
|
0 |
|
|
|
0 |
|
|
|
125,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Terry Walters
|
|
|
0 |
|
|
|
0 |
|
|
|
90,800 |
|
|
|
35,000 |
|
|
|
448,759 |
|
|
|
303,515 |
|
|
|
(1) |
Based on market value of Plantronics common stock at
April 1, 2006 of $35.43, minus the exercise price (where
the exercise price of a given option is greater than $35.43, the
value of such option was calculated as zero). |
10b5-1 Trading Plans
Plantronics permits our Officers and Directors to adopt trading
plans under
Rule 10b5-1
(Rule 10b5-1)
promulgated under the Securities Exchange Act of 1934, as
amended (the Exchange Act), which allows
stockholders to establish prearranged written plans to buy or
sell shares or exercise stock options in accordance with
predetermined formulas.
Rule 10b5-1 plans
allow stockholders to buy or sell shares of Plantronics common
stock according to their plan on a regular basis (for example,
weekly or monthly or in accordance with another predetermined
formula), regardless of any subsequent nonpublic information
they receive. As of April 30, 2006, any officers who
previously entered into 10b5-1 Trading Plans had terminated all
such plans.
Employment Agreements and
Change-in-Control
Arrangements
In July 1999, Plantronics entered into a three-year employment
agreement with Ken Kannappan, Chief Executive Officer. This
employment agreement superseded the employment agreement entered
into between Plantronics and Mr. Kannappan in March 1996.
The term of the current agreement automatically extends, after
its initial three-year term, for additional one-year periods
unless either Plantronics or Mr. Kannappan gives advance
notice of termination.
Mr. Kannappans contract is expected to renew in the
ordinary course. The agreement provided for an initial annual
base salary of $375,000, payable in installments on
Plantronics regular payroll schedule.
34
Mr. Kannappans performance is reviewed annually by
the Compensation Committee, and his base salary is adjusted
annually based upon that review in the discretion of the
committee. His current base salary is approximately
$500,000 per year. The Agreement provides also for receipt
by Mr. Kannappan of profit sharing payments under
Plantronics profit sharing plan. The agreement also
provides for performance bonuses of up to 83.3% of base salary
if Plantronics meets certain performance targets established by
the Board. A portion of the bonus is payable quarterly with the
remainder payable after the close of the fiscal year and the
release of financial results. Mr. Kannappan is also
eligible to participate in the Companys Over Achievement
Bonus plan from which no payments were made in the fiscal year
2006.
Pursuant to Mr. Kannappans employment agreement, in
the event that (i) Plantronics terminates
Mr. Kannappans employment (other than for cause),
including voluntary resignation by Mr. Kannappan because of
a constructive discharge (as defined in the agreement); or
(ii) Mr. Kannappan terminates his employment
voluntarily; or (iii) Mr. Kannappans employment
terminates because of death or disability, he (or his
beneficiaries in the case of death) will receive for a period of
2 years from the date of termination of employment
(a) continued cash compensation payments equal to 75% of
the average of the cash compensation earned in the four full
fiscal quarters immediately preceding the date of termination of
employment, and (b) continuation of certain fringe
benefits. Under the agreement, a termination is for
cause only if such termination results from gross
misconduct that is materially injurious to Plantronics.
Cash compensation as used above means base salary,
profit sharing, and incentive bonuses earned in the applicable
four fiscal quarters, even if the amounts are paid in subsequent
periods. If his employment terminates from death or disability,
his benefits will be offset to the extent of any disability or
death benefits payable under any Plantronics employee benefit
plan. For a period of 36 months following
Mr. Kannappans termination of employment with
Plantronics, Mr. Kannappan may not perform services for any
direct competitor of Plantronics and may not solicit any of
Plantronics employees to become employed by any other
business enterprise.
Under Mr. Kannappans employment agreement,
Plantronics has agreed to indemnify Mr. Kannappan to the
fullest extent permitted by law so long as Mr. Kannappan
acts in good faith. Failure by Plantronics to provide such
indemnification is deemed to be a breach of the employment
agreement and may be deemed a termination of
Mr. Kannappans employment other than for cause.
Mr. Breier joined Plantronics in June 2004 as Chief
Marketing Officer, and entered into an employment agreement with
Plantronics at that time. The agreement provides that if, within
2 years of a change of control of Plantronics,
Mr. Breiers employment is terminated other than for
cause, or his employment terminates due to death or disability,
he, or his beneficiaries, will receive continuation of base
salary and fringe benefits for 6 months or up to
12 months if he is unable to obtain subsequent employment.
For purposes of the agreement, fringe benefits exclude bonus,
profit sharing, deferred compensation or incentive compensation
plans. If Mr. Breiers employment is terminated for
cause, he will receive no benefits except as may be provided by
Plantronics employee benefit plans generally. Under the
agreement, a termination is for cause if such
termination results from (i) willful failure, after written
warning, to comply with Companys policies or practices or
to follow supervisors instructions; (ii) willful
misconduct that is materially injurious to Plantronics;
(iii) commission of a felony, an act of fraud or
misappropriation of Companys property; or
(iv) material breach of employment or patent, secrecy and
invention agreements. The agreement also contains a two-year
non-compete covenant which takes effect upon termination of
Mr. Breiers employment. However, such covenants are
generally unenforceable under California law absent special
circumstances.
Ms. Shimizu entered into an employment agreement with
Plantronics May 2001. This agreement is substantially similar to
the agreement with Mr. Breier and has been filed with the
SEC.
Mr. Vanhoutte joined Plantronics Ltd., a Plantronics
subsidiary, as Managing Director, effective June 12, 2003
and signed a Service Agreement at that time. The Service
Agreement covers normal employment terms and conditions and
permits immediate dismissal for a number of enumerated
provisions that would constitute for cause
termination. In addition, his employment may be terminated by
either party by giving six (6) months notice. Once this
notice is given, the Company may terminate Mr. Vanhoutte by
paying him twelve (12) months base salary if termination
occurs in the second twelve (12) months of employment or six
35
(6) months of base salary if the termination occurs
thereafter. If Mr. Vanhoutte is terminated for cause, he
will receive six (6) months base salary. The Service
Agreement also contains a six (6) month covenant not to
compete.
Compensation Committee Interlocks and Insider
Participation
No Compensation Committee interlocks exist.
Companys Stock Performance
Set forth below is a line graph comparing the annual percentage
change in the cumulative return to the stockholders of
Plantronics common stock with the cumulative return of the NYSE
Stock Market index and a peer group index for the period
commencing on the morning of March 31, 2001 and ending on
April 1, 2006. The information contained in the performance
graph shall not be deemed to be soliciting material
or to be filed with the SEC, nor shall such
information be incorporated by reference into any future filing
under the Exchange Act, except to the extent that Plantronics
specifically incorporates it by reference into such filing.
The graph assumes that $100 was invested on the morning of
March 30, 2001 in Plantronics common stock and in each
index (based on prices from the close of trading on
March 30, 2001), and that dividends, if any, were
reinvested. No cash dividends have been declared or paid on
Plantronics common stock in the relevant period.
Under the assumptions stated above, over the period from
March 30, 2001 to March 31, 2006 the total return on
an investment in Plantronics would have been 201.4% as compared
to 134.0% for the NYSE/ AMEX/ NASDAQ Stock Market index
(U.S. Companies only) and 113.4% for the NYSE/ AMEX/ NASDAQ
Communications Equipment Stocks index shown below. Past
performance is no indication of future value and stockholder
returns over the indicated period should not be considered
indicative of future returns.
36
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
Plantronics, Inc.
Produced on (05/15/2006 including data to 03/31/2006
Prepared by CRSP (www.crsp.uchicago.edu). Center for Research in
Security Prices, Graduate School of Business, The University of
Chicago. Used with permission. All rights reserved.
37
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Exchange Act requires
Plantronics Executive Officers and Directors, and persons
who own more than ten percent of a registered class of
Plantronics equity securities, to file reports of
ownership and changes in ownership with the Securities Exchange
Commission and the New York Stock Exchange. Executive Officers,
Directors and greater than ten percent stockholders are required
by Securities Exchange Commission regulation to furnish
Plantronics with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms
received by it, or written representations from certain
reporting persons, Plantronics believes that, during fiscal
2006, all filing requirements applicable to its Executive
Officers and Directors were performed.
OTHER MATTERS
Plantronics knows of no other matters to be submitted at the
Annual Meeting. If any other matters properly come before the
Annual Meeting, it is the intention of the persons named in the
enclosed form of proxy to vote the shares they represent as the
Board may recommend.
|
|
|
For the Board of Directors |
|
|
|
|
Rich Pickard |
|
Secretary |
Dated: June 13, 2006
38
APPENDIX A
REPORT OF AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following is the Audit Committees report submitted to
the Board of Directors for the fiscal year ended March 31,
2006.
The Audit Committee of the Board of Directors has:
|
|
|
|
|
Reviewed and discussed Plantronics audited financial
statements for the fiscal year ended March 31, 2006 with
Plantronics management, which has primary responsibility
for the financial statements; |
|
|
|
Discussed with PricewaterhouseCoopers LLP, Plantronics
independent registered public accounting firm, the materials
required to be discussed by Statement of Auditing Standard 61; |
|
|
|
Reviewed the written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independent Standards
Board No. 1 and has discussed with PricewaterhouseCoopers
LLP regarding its independence; and |
|
|
|
Considered whether the provision of non-audit services as noted
under Proposal Five is compatible with maintaining
PricewaterhouseCoopers LLP independence, and has determined that
such provision of non-audit services is compatible. |
The Board of Directors determined that each member of the Audit
Committee is, and has been at all times during the 2006 fiscal
year, independent as defined under the NYSE listing
standards and Plantronics independence guidelines. Each member
of the Audit Committee also satisfies the SECs additional
independence requirement for members of Audit Committees. The
Board of Directors has further determined that Directors Gregg
Hammann, Marshall Mohr and Marv Tseu are audit committee
financial experts as such term is defined in
Item 401(h) of
Regulation S-K
promulgated by the SEC.
Based on the foregoing review and discussion, the Audit
Committee recommended to the Board of Directors that the audited
financial statements be included in Plantronics 2006
Annual Report on
Form 10-K.
|
|
|
The Audit Committee |
|
|
Gregg Hammann |
|
Marshall Mohr |
|
Marv Tseu |
A-1
APPENDIX B
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS
The Compensation Committee (the Committee) of the
Board of Directors is responsible for reviewing and approving
Plantronics executive compensation policies and the
compensation paid to the executive officers. The Committee also
advises Plantronics management on the compensation
policies in place for all non-executive personnel. The Committee
is comprised of the members named below, all of whom are
independent Directors.
The Committee furnished the following report describing
compensation policies and rationale applicable to
Plantronics executive officers for the fiscal year ended
March 31, 2006. The information contained in such report
shall not be deemed to be soliciting material or to
be filed with the SEC, nor shall such information be
incorporated by reference into any future filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that Plantronics specifically incorporates
it by reference into such filing.
Compensation Policies. Plantronics basic
compensation philosophy is that compensation should be tied to
performance. The structure of Plantronics compensation
program is designed to link executive compensation to the
performance of Plantronics as well as to the individual
contribution of each executive and to make a certain portion of
each executives compensation variable as opposed to fixed.
Plantronics performance-based compensation program is a
total system consisting of base salary and at risk
incentives that reward executives for the achievement of
performance levels designed to enhance the value of Plantronics
stock. A significant portion of each executives
compensation is dependent upon meeting certain financial goals
of Plantronics and individual performance objectives.
The guiding principles of the Plantronics executive
compensation program are to (i) provide a total
compensation package that will attract highly qualified
executives to Plantronics, motivate such individuals to perform
at their highest levels, reward outstanding performance, and
retain executives whose skills are essential for building
Plantronics business and long-term stockholder value;
(ii) establish annual incentives for executives that are
directly tied to the overall financial performance of
Plantronics as well as to individual performance goals; and
(iii) implement short and long-term incentives to focus
executives on managing Plantronics from the perspective of an
owner with an equity stake in the business and align executive
compensation with benefits realized by Plantronics
stockholders.
There are four basic components of Plantronics
compensation program: (i) base salary; (ii) incentive
bonuses which reward executives for achievement of
pre-established goals; (iii) long-term incentive stock
options or restricted stock that align executive compensation
incentives with the interests of Plantronics stockholders;
and (iv) compensation and employee benefits generally
available to employees of Plantronics, such as Plantronics
nonqualified cash quarterly profit sharing plan and qualified
defined contribution savings plan, including a non-elective
employer contribution of 3% of base salary and a matching of 50%
of the first 6% of compensation under Section 401(k) of the
Internal Revenue Code.
During fiscal 2005, the Compensation Committee hired a third
party consultant to examine the total cash and equity components
of the compensation package that Plantronics provides to its
executives to determine if such compensation was competitive.
The consultant examined West Coast, nationwide and worldwide
surveys in areas where Plantronics competes for executive talent
to compare the base salaries, bonuses, and stock options to
those of peer and slightly smaller companies. The Compensation
Committee used this data to make adjustments to executive
compensation to achieve Plantronics overall goals. The
Compensation Committee used the fiscal 2005 data for both fiscal
2005 and fiscal 2006. In fiscal 2007, the Compensation Committee
expects to seek then current total cash and equity compensation
data from a third party consultant.
Base Salaries. Base salaries for Plantronics
executive officers are determined by evaluating each
executives scope of responsibility, prior experience and
salary history with a focus on such executives past
performance with Plantronics and/or expected contribution to
Plantronics future success. For reference, Plantronics
used the third party consultants survey data to assist the
Compensation Committee, the Chief Executive Officer and
Plantronics Human Resources department in analyzing
competitive salary information to determine appropriate salary
levels for Plantronics executives. After analyzing the
surveys, the Chief
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Executive Officer recommended an annual salary increase budget
for approval by the Compensation Committee and further
recommended salary increases within such budget for the
individual executives because based on market data, a salary
increase was not required. For fiscal 2006, the Chief Executive
Officer, all of his direct reports and all vice-presidents and
above at Plantronics received no base salary increases but
received restrictive stock awards in lieu of base salary
increases and most other equity compensation awards. The process
for determination of the Chief Executive Officers
compensation, including base salary, is set forth below.
Incentive Bonus Awards. Under Plantronics Regular
and Supplemental Bonus Plan for fiscal 2006, incentive cash
payments (Regular and Supplemental bonuses) were based on
achievement of individual, team and company objectives. A
portion of the bonus awards earned under the plans described
below were paid on a quarterly basis during fiscal 2006 while
fourth quarter and Supplemental Bonus awards were paid in the
first quarter of fiscal 2007 after the close of the 2006 fiscal
year. The plan is composed of two programs consisting of a
Regular Bonus Plan and a Supplemental Bonus Plan. Each plan is
designed to reward the performance of certain officers, subject
to the approval of the Compensation Committee, and certain key
employees designated by the Chief Executive Officer.
Under the Regular Bonus Plan, a participant becomes eligible to
earn up to a certain percentage of base salary based upon
achievement of individual, team, business unit or company
objectives, as determined by the supervisor, department Vice
President, and/or the CEO. Payments pursuant to the Regular
Bonus Plan are made both on a quarterly and annual basis.
Payments for fourth quarter objectives and annual objectives
respectively are made after the end of the fiscal year.
Target base salary for the Supplemental Bonus Plan is computed
based on actual salary earned for the year. Actual payment is
based on individual, team and company performance scores. Such
bonuses are paid to the eligible participants who must be
employed by Plantronics on the day the bonus is paid. If not
employed on the payment date, the participant shall not be
entitled to any funds. If the participant dies, or is disabled
and therefore unable to work during the relevant quarter or
prior to the payment date, the participant will be treated as
being employed on the payment date and the participant or the
participants estate will be entitled to the portion of the
quarterly bonus actually earned on a pro rata basis using the
time actually worked during the relevant quarter.
Under the Supplemental Bonus Plan, a participant becomes
eligible to earn up to a certain percentage of base salary upon
achievement of objectives. Objectives include both company
performance targets as well as individual performance
objectives. Payments under the Supplemental Bonus Plan are paid
after the close of the fiscal year and only on the basis of
relative achievement against the Board approved plan for
adjusted net income excluding one-time gains/losses from sales
of capital assets and write-offs. Should the fiscal year
adjusted net income be less than the Board-approved plan,
Supplemental Bonus payments will be reduced proportionately,
i.e. 95% achievement of net income funds a pool equal to 95% of
target bonuses. Should fiscal year net income be lower than the
prior year, there will be no funding of the Supplemental Bonus
Plan. Each participant receives payment only to the extent of
actual accomplishment of individual objectives. Maximum pay out
for any individual is 100% of target. Supplemental Bonus amounts
are payable within ninety days after completion of
Plantronics audited financial statements at fiscal year
end to participants who continue to be employed by Plantronics
on the payment date. If not employed on the payment date, the
participant does not receive any funds. If the participant dies,
or is disabled and therefore unable to work during the fiscal
year or prior to the payment date, the participant will be
treated as being employed on the payment date and the
participant or the participants estate will be entitled to
the portion of the Supplemental Bonus actually earned on a pro
rata basis using the time actually worked during the fiscal
year. Plantronics did not achieve the Board approved plan for
net income in its 2006 fiscal year, and net income was lower
than fiscal 2005, therefore the Supplemental Bonus pool was not
funded. In fiscal 2006, the Supplemental Bonus pool was based on
the Audio Communications Group financial performance. The
performance of the Audio Entertainment Group, based primarily on
the financial results of Altec Lansing which was purchased part
way through the fiscal year, did not count toward achieving the
goals of the Supplemental Bonus pool.
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In fiscal 2001, the Compensation Committee established an Over
Achievement Bonus Plan for the purpose of rewarding corporate
and individual performance in excess of annual targeted
objectives. To receive bonus funds from the pool, Plantronics
must have surpassed its annual targets and a participating
executive must also have achieved greater than 90% weighted
average individual performance scores on his or her goals and
objectives during the fiscal year. The Company did not meet its
annual targets and thus there was no funding of any bonus monies
under this plan in fiscal 2006.
Stock Options. Plantronics provides long-term incentives
to executive officers through its 1993 Stock Option Plan,
adopted by the Board of Directors in September 1993, as
subsequently amended and through its 2003 Stock Plan, adopted by
the Board of Directors in May 2003 and ratified by stockholders
on June 27, 2003, as subsequently amended. The 1993 Stock
Option Plan expired on September 23, 2003. The 2003 Stock
Plan took effect on September 24, 2003. The 1993 Stock
Option Plan and the 2003 Stock Plan shall together be referred
to as the Stock Plan. To attract and retain highly qualified
executives and to align the interests of the executives with the
interests of Plantronics stockholders, stock options
constitute a significant portion of Plantronics incentive
compensation program. Options granted under the 1993 Stock
Option Plan incorporate vesting schedules to encourage employees
to remain with Plantronics. Generally, in granting options to
executives, the Compensation Committee takes into consideration
the individuals position with Plantronics,
responsibilities, past performance and future potential to
influence the long-term growth and profitability of Plantronics,
as well as the individuals existing equity interest in
Plantronics, giving primary weight to position, responsibilities
and performance.
Restricted Stock. In September 2004, the Compensation
Committee received a report from a third party consultant hired
to examine the total cash and equity components of the
compensation package that Plantronics provides to its
executives. At their September, 2004 meeting, the Compensation
Committee examined the results of the report and the methods of
providing raises to the CEO and certain of his direct reports.
The Committee discussed the pros and cons of providing raises in
the form of cash versus restricted stock. At the conclusion of
this discussion, the Compensation Committee concluded that they
should not award merit raises to the CEO or his direct reports.
Rather, a decision was made to issue restricted stock to the CEO
and certain of his direct reports in lieu of merit raises. This
was thought to begin to better align the cash and equity
components of compensation of Plantronics executives with
the compensation packages afforded to executives at peer
companies. Vesting of this restricted stock was to occur pro
rata on a quarterly basis over a 5 year vesting period from
the date of the grants. At their meeting on October 19,
2005, the Compensation Committee determined to adopt a similar
practice of awarding restricted stock in lieu of merit raises
due in October 2005 for the Chief Executive Officer and his
direct reports. The price of the restricted stock in all grants
made on September 22, 2004 and on October 19, 2005 was
par value of $0.01.
Compensation of Chief Executive Officer. In making
compensation decisions with respect to the Chief Executive
Officer, the Compensation Committee refers to
Mr. Kannappans Employment Agreement (described in
this Proxy Statement under the caption Additional
Information Employment Agreements and
Change-in-Control
Arrangements), and also generally applies the compensation
philosophy described above.
Mr. Kannappans current annual base salary is
approximately $500,000. He did not receive a raise in base
salary in fiscal 2006. Mr. Kannappan received 27.5% of the
target bonus amount for fiscal 2006 under Plantronics
Regular and Supplemental Bonus Plans. All of
Mr. Kannappans bonus was paid in 2006 under the
Regular Bonus Plan and none under the Supplemental Bonus Plan.
The criterion for payment under the Regular Bonus Plan is
achievement of quarterly earnings per share relative to the
Board of Directors approved plan. Mr. Kannappans
fiscal 2006 bonus was determined (pursuant to his Employment
Agreement) in accordance with Plantronics Regular and
Supplemental Bonus Plans approved by the Board of Directors. The
criteria for funding the Over Achievement Bonus Plan were not
met in fiscal 2006, so no payouts were made. On October 19,
2005, Plantronics issued Mr. Kannappan an option to
purchase 24,000 shares of Plantronics common stock at
an option price of $27.16 per share. On October 19,
2005, Plantronics granted Mr. Kannappan 22,000 shares
of restricted stock for a purchase price of par value of
$0.01 per share.
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Tax Deductibility of Executive Compensation. Beginning in
1994, Section 162 of the Internal Revenue Code of 1986, as
amended (the Code), limits the federal income tax
deductibility of compensation, other than performance-based
compensation within the meaning of Section 162(m), paid to
Plantronics Chief Executive Officer and to each of the
other four most highly compensated executive officers.
Plantronics may deduct such compensation only to the extent that
during any fiscal year the compensation paid to any such
individual does not exceed $1,000,000. Based on
Plantronics current compensation plans and policies,
Plantronics and the Committee believe that, for the near future,
there is little risk that Plantronics will lose any material tax
deduction for executive compensation.
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Members of the Compensation Committee: |
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Gregg Hammann |
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Trude Taylor |
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Marv Tseu |
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APPENDIX C
PLANTRONICS, INC.
2003 STOCK PLAN
Amended and restated as of July 26, 2006
Section 1. Purposes and
Definitions
1.1 Purposes of the Plan.
The purposes of this 2003 Stock Plan are:
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(A) to attract and retain the best available personnel for
positions of substantial responsibility, |
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(B) to provide additional incentive to Employees, Directors
and Consultants, and |
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(C) to promote the success of the Companys business. |
1.2 The Plan permits the grant of
Incentive Stock Options, Nonstatutory Stock Options, Restricted
Stock Awards, Stock Appreciation Rights, and Restricted Stock
Units, as determined by the Administrator at the time of grant.
1.3 Definitions. As used
herein, the following definitions shall apply:
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(A) Administrator means the Board or any
Committees as shall be administering the Plan, in accordance
with Section 2.2. |
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(B) Annual Revenue means the Companys or
a business units net sales for the Fiscal Year, determined
in accordance with generally accepted accounting principles. |
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(C) Applicable Laws means the requirements
relating to the administration of equity based awards under
U.S. state corporate laws, U.S. federal and state
securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where
Awards are, or will be, granted under the Plan. |
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(D) Award means, individually or collectively,
a grant under the Plan of Options, Restricted Stock Awards,
SARs, and Restricted Stock Units. |
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(E) Award Agreement means the written or
electronic agreement setting forth the terms and provisions
applicable to each Award granted under the Plan and shall
include an Option Agreement and a Restricted Stock Award
Agreement, as applicable. The Award Agreement is subject to the
terms and conditions of the Plan. |
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(F) Board means the Board of Directors of the
Company. |
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(G) Cash Position means the Companys
level of cash and cash equivalents. |
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(H) Change in Control means the occurrence of
any of the following events: |
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(i) Any person (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) becomes the
beneficial owner (as defined in Rule 13d3 of
the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the total
voting power represented by the Companys then outstanding
voting securities; or |
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(ii) The consummation of the sale or disposition by the
Company of all or substantially all of the Companys assets; |
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(iii) A change in the composition of the Board occurring
within a two-year period, as a result of which fewer than a
majority of the Directors are Incumbent Directors.
Incumbent Directors means Directors who either
(A) are Directors as of the effective date of the Plan, or
(B) are elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination
(but will not include an individual whose election or nomination
is in connection with an actual or threatened proxy contest
relating to the election of Directors to the Company); or |
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(iv) The consummation of a merger or consolidation of the
Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or its parent) at
least fifty percent (50%) of the total voting power represented
by the voting securities of the Company or such surviving entity
or its parent outstanding immediately after such merger or
consolidation. |
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(I) Code means the Internal Revenue Code of
1986, as amended. |
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(J) Committee means a committee of individuals
appointed by the Board in accordance with Section 2.2. |
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(K) Common Stock means the common stock of the
Company. |
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(L) Company means Plantronics, Inc., a Delaware
corporation. |
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(M) Consultant means any natural person,
including an advisor, engaged by the Company or a Parent or
Subsidiary to render services to such entity. |
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(N) Determination Date means the latest
possible date that will not jeopardize the qualification of an
Award granted under the Plan as performance-based
compensation under Section 162(m) of the Code. |
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(O) Director means a member of the Board. |
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(P) Disability means total and permanent
disability as defined in Section 22(e)(3) of the Code. |
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(Q) Earnings Per Share means as to any Fiscal
Year, the Companys or a business units Net Income,
divided by a weighted average number of common shares
outstanding and dilutive common equivalent shares deemed
outstanding, determined in accordance with generally accepted
accounting principles. |
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(R) Employee means any person, including
Officers and Directors, employed by the Company or any Parent or
Subsidiary of the Company. Neither service as a Director nor
payment of a Directors fee by the Company shall be
sufficient to constitute employment by the Company. |
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(S) Exchange Act means the Securities Exchange
Act of 1934, as amended. |
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(T) Fair Market Value means, as of any date,
the value of Common Stock determined as follows: |
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(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without
limitation the New York Stock Exchange (NYSE), its Fair Market
Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such
exchange or system for the day of determination, as reported in
The Wall Street Journal or such other source as the
Administrator deems reliable; |
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(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not
reported, the Fair Market Value of a Share of Common Stock shall
be the mean between the high bid and low asked prices for the
Common Stock on the day of determination, as reported in The
Wall Street Journal or such other source as the Administrator
deems reliable; or |
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(iii) In the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in good
faith by the Administrator. |
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(U) Fiscal Year means the fiscal year of the
Company. |
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(V) Incentive Stock Option means an Option
intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code and the regulations
promulgated thereunder. |
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(W) Individual Performance Objective means any
individual Company business-related objective that is
objectively determinable within the meaning of Code
Section 162(m) and the Treasury Regulations promulgated
thereunder. Individual Performance Objectives shall include, but
not be limited |
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to, improvement in customer satisfaction, opening of additional
retail stores, and similar objectively determinable performance
objectives related to the Participants job
responsibilities with the Company. |
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(X) Net Income means as to any Fiscal Year, the
income after taxes of the Company for the Fiscal Year determined
in accordance with generally accepted accounting principles. |
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(Y) Nonstatutory Stock Option means an Option
not intended to qualify as an Incentive Stock Option. |
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(Z) Notice of Grant means a written or
electronic notice evidencing certain terms and conditions of the
grant of an individual Option or a Restricted Stock Award. The
Notice of Grant is part of the agreement evidencing the terms
and conditions of a specific grant. |
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(AA) Officer means a person who is an officer
of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated
thereunder. |
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(BB) Operating Cash Flow means the
Companys or a business units sum of Net Income plus
depreciation and amortization less capital expenditures plus
changes in working capital comprised of accounts receivable,
inventories, other current assets, trade accounts payable,
accrued expenses, product warranty, advance payments from
customers and long-term accrued expenses, determined in
accordance with generally acceptable accounting principles. |
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(CC) Operating Income means the Companys
or a business units income from operations determined in
accordance with generally accepted accounting principles. |
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(DD) Option means a stock option granted
pursuant to the Plan, as evidenced by a Notice of Grant. |
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(EE) Option Agreement means an agreement
between the Company and a Participant evidencing the terms and
conditions of an individual Option grant. The Option Agreement
is subject to the terms and conditions of the Plan. |
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(FF) Optioned Stock means the Common Stock
subject to an Award. |
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(GG) Outside Director means a Director who is
not an Employee. |
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(HH) Parent means a parent
corporation, whether now or hereafter existing, as defined
in Section 424(e) of the Code. |
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(II) Participant means the holder of an
outstanding Award granted under the Plan. |
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(JJ) Performance Goals will have the meaning
set forth in Section 7.1 of the Plan. |
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(KK) Performance Period means any Fiscal Year
of the Company or such other period as determined by the
Administrator in its sole discretion. |
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(LL) Plan means this 2003 Stock Plan, as
amended and restated. |
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(MM) Restricted Stock means shares of Common
Stock acquired pursuant to a grant of Restricted Stock Award or
the early exercise of an Option. |
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(NN) Restricted Stock Award means a grant of
Restricted Stock pursuant to the Plan, as evidenced by a Notice
of Grant. |
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(OO) Restricted Stock Award Agreement means a
written agreement between the Company and a Participant
evidencing the terms and restrictions applying to stock granted
under a Restricted Stock Award. The Restricted Stock Award
Agreement is subject to the terms and conditions of the Plan and
the Notice of Grant. |
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(PP) Restricted Stock Unit means an Award
granted to a Participant pursuant to Section 6. |
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(QQ) Retirement unless otherwise defined in the
Award Agreement or in a written employment, services or other
agreement between the Participant and the Company or any Parent
or Subsidiary of the |
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Company, will have such meaning as the Administrator may
determine, or, if not so defined, will mean termination of
Participants status as a Service Provider after he or she
reaches age 55 and has completed at least ten
(10) years of employment or service with the Company or any
Parent or Subsidiary of the Company; provided, however, that
with respect to Outside Directors who are granted Options
pursuant to Section 3.2 hereof, Retirement will
mean termination of an Outside Directors status as a
Director when (i) the Outside Directors age is 55 or
over and he or she has continuously been a Director for at least
seven (7) years on the date of such termination or
(ii) the Outside Director has continuously been a Director
for at least ten (10) years from the date of such
termination. |
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(RR) Return on Assets means the percentage
equal to the Companys or a business units Operating
Income before incentive compensation, divided by average net
Company or business unit, as applicable, assets, determined in
accordance with generally accepted accounting principles. |
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(SS) Return on Equity means the percentage
equal to the Companys Net Income divided by average
shareholders equity, determined in accordance with
generally accepted accounting principles. |
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(TT) Return on Sales means the percentage equal
to the Companys or a business units Operating Income
before incentive compensation, divided by the Companys or
the business units, as applicable, revenue, determined in
accordance with generally accepted accounting principles. |
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(UU) Rule 16b-3
means Rule 16b-3
of the Exchange Act or any successor to
Rule 16b-3, as in
effect when discretion is being exercised with respect to the
Plan. |
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(VV) Section 16(b) means
Section 16(b) of the Exchange Act. |
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(WW) Securities Act means the Securities Act of
1933, as amended. |
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(XX) Service Provider means an Employee,
Director or Consultant. |
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(YY) Share means a share of the Common Stock,
as adjusted in accordance with Section 8.4. |
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(ZZ) Stock Appreciation Right or
SAR means an Award, granted alone or in connection
with an Option, that pursuant to Section 5 is designated as
an SAR. |
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(AAA) Subsidiary means a subsidiary
corporation, whether now or hereafter existing, as defined
in Section 424(f) of the Code. |
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(BBB) Total Stockholder Return means the total
return (change in share price plus reinvestment of any
dividends) of a share of the Companys common stock. |
Section 2. Administration
2.1 Stock Subject to the
Plan.
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(A) Subject to the provisions of Section 8.4, the
maximum aggregate number of Shares that may be optioned and sold
under the Plan is 5,100,000 Shares. The Shares may be
authorized, but unissued, or reacquired Common Stock. |
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(B) Any Shares subject to Awards granted with an exercise
price less than the Fair Market Value on the date of grant of
such Awards will be counted against the numerical limits of
Section 2.1(D) as 2.5 Shares for every one Share
subject thereto. Further, if Shares acquired pursuant to any
such Award are forfeited or repurchased by the Company and would
otherwise return to the Plan pursuant to Section 2.1(A),
2.5 times the number of Shares so forfeited or repurchased will
return to the Plan and will again become available for issuance. |
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(C) Shares will not be deemed to have been issued pursuant
to the Plan with respect to any portion of an Award that is
settled in cash. With respect to SARs, all of the Shares for
which the Award is exercised (that is, Shares actually issued
pursuant to a SAR, as well as the Shares that represent payment
of the exercise price) will cease to be available under the
Plan. Shares used to pay the tax and exercise price of an Award
will not become available for future grant or sale under the
Plan. |
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(D) If an Award expires or becomes unexercisable without
having been exercised in full, or with respect to Restricted
Stock or Restricted Stock Units, is forfeited to or repurchased
by the Company, the unpurchased Shares (or for Awards other than
Options and SARs, the forfeited or repurchased Shares) which
were subject thereto shall become available for future grant or
sale under the Plan (unless the Plan has terminated); provided,
however, that Shares that have actually been issued under the
Plan, whether upon exercise or of an Award or issuance with
respect thereto, shall not be returned to the Plan and shall not
become available for future distribution under the Plan, except
that if unvested Shares of Restricted Stock or Restricted Stock
Units are repurchased by or forfeited to the Company, such
Shares shall become available for future grant under the Plan. |
2.2 Administration of the
Plan.
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(i) Multiple Administrative Bodies. Different
Committees with respect to different groups of Service Providers
may administer the Plan. |
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(ii) Section 162(m). To the extent that the
Administrator determines it to be desirable to qualify Awards as
performance based compensation within the meaning of
Section 162(m) of the Code, the Plan shall be administered
by a Committee of two or more outside directors
within the meaning of Section 162(m) of the Code. |
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(iii) Rule 16b-3.
To the extent desirable to qualify transactions hereunder as
exempt under
Rule 16b-3, the
transactions contemplated hereunder shall be structured to
satisfy the requirements for exemption under
Rule 16b-3. |
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(iv) Other Administration. Other than as provided
above, the Plan shall be administered by (A) the Board or
(B) a Committee, which committee shall be constituted to
satisfy Applicable Laws. |
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(B) Powers of the Administrator. Subject to the
provisions of the Plan, and in the case of a Committee, subject
to the specific duties delegated by the Board to such Committee,
the Administrator shall have the authority, in its discretion: |
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(i) to determine the Fair Market Value; |
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(ii) to select the Service Providers to whom Awards may be
granted hereunder; |
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(iii) to determine the number of shares of Common Stock to
be covered by each Award granted hereunder; |
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(iv) to approve forms of agreement for use under the Plan; |
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(v) to determine the terms and conditions of any Award in
accordance with the provisions of the Plan; provided, however,
that the Administrator will not permit any Participant to issue
a promissory note in order to exercise or otherwise acquire
Shares pursuant to an Award; |
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(vi) to construe and interpret the terms of the Plan and
Awards granted pursuant to the Plan; |
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(vii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating
to subplans established for the purpose of satisfying applicable
foreign laws; |
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(viii) to modify or amend each Award (subject to
Section 8.6(C)), including the discretionary authority to
extend the post-termination exercisability period of Awards
longer than is otherwise provided for in the Plan; |
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(ix) to allow Participants to satisfy withholding tax
obligations by electing to have the Company withhold from the
Shares to be issued upon exercise of an Award that number of
Shares having a Fair Market Value equal to the minimum amount
required to be withheld. The Fair Market Value of the Shares to
be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined. All elections by the
Participant to have Shares withheld for this |
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purpose shall be made in such form and under such conditions as
the Administrator may deem necessary or advisable; |
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(x) to authorize any person to (i) make decisions,
determinations and interpretations on behalf of the
Administrator to the extent allowed under Applicable Laws, and
(ii) execute on behalf of the Company any instrument
required to effect the grant of an Award previously granted by
the Administrator; and |
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(xi) to make all other determinations deemed necessary or
advisable for administering the Plan. |
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(C) Effect of Administrators Decision. The
Administrators decisions, determinations and
interpretations, and those of any person authorized by the
Administrator to make decisions, determinations and
interpretations on behalf of the Administrator, shall be final
and binding on all Participants and any other holders of Awards. |
2.3 Eligibility.
Nonstatutory Stock Options may be granted to Service
Providers provided, that, Outside Directors may only be granted
Nonstatutory Stock Options granted pursuant to Section 3.2.
Incentive Stock Options may be granted only to Employees. Stock
Appreciation Rights, Restricted Stock Awards and Restricted
Stock Units may be granted only to Employees and Consultants.
Section 3. Stock Options
3.1 Limitations.
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(A) Each Option shall be designated in the Award Agreement
as either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designation, to the extent
that the aggregate Fair Market Value of the Shares with respect
to which Incentive Stock Options are exercisable for the first
time by the Participant during any calendar year (under all
plans of the Company and any Parent or Subsidiary) exceeds
$100,000, such Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 3.1, Incentive Stock
Options shall be taken into account in the order in which they
were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares
is granted. |
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(B) The following limitations shall apply to grants of
Options: |
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(i) No Participant shall be granted, in any Fiscal Year of
the Company, Options to purchase more than 500,000 Shares. |
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(ii) In connection with his or her initial employment, a
Participant may be granted Options to purchase up to an
additional 500,000 Shares, which shall not count against
the limit set forth in Section 3.1(B)(i). |
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(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the
Companys capitalization as described in Section 8.4. |
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(iv) If an Option is cancelled in the same Fiscal Year of
the Company in which it was granted (other than in connection
with a transaction described in Section 8.4), the cancelled
Option will be counted against the limits set forth in Sections
3.1(B)(i) and (ii). |
3.2 Grants of Options to Outside
Directors.
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(A) Procedure for Grants. All grants of Options to
Outside Directors under this Plan shall be automatic and
non-discretionary and shall be made strictly in accordance with
the following provisions: |
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(i) No person shall have any discretion to select which
Outside Directors shall be granted Options or to determine the
number of Shares to be covered by Options granted to Outside
Directors. |
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(ii) All Options granted pursuant to this Section shall be
Nonstatutory Stock Options and, except as otherwise provided
herein, shall be subject to the other terms and conditions of
the Plan. |
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(iii) Each person who first becomes an Outside Director
following the effective date of this Plan shall be automatically
granted an option to purchase 12,000 Shares (the
First Option) on the date on which such person first
becomes an Outside Director, whether through election by the
stockholders of the Company or appointment by the Board to fill
a vacancy. |
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(iv) After the First Option has been granted to an Outside
Director, such Outside Director shall thereafter be
automatically granted an Option to
purchase 3,000 Shares (a Subsequent
Option) on January 15 of each year, provided the Outside
Director will continue to be an Outside Director through the
applicable date and, if on such date, he or she shall have
served on the Board for at least the preceding six
(6) months. |
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(v) Notwithstanding the provisions of subsections
(iii) and (iv) hereof, in the event that a grant would
cause the number of Shares subject to outstanding Awards plus
the number of Shares previously purchased upon exercise of an
Award to exceed the number of Shares available for issuance
under the Plan, then each such automatic grant shall be for that
number of Shares determined by dividing the total number of
Shares remaining available for grant by the number of Outside
Directors on the automatic grant date. Any further grants shall
then be deferred until such time, if any, as additional Shares
become available for grant under the Plan through action of the
stockholders to increase the number of Shares which may be
issued under the Plan or through cancellation or expiration of
Options previously granted hereunder. |
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(B) The terms of an Option granted to an Outside Director
shall be as follows: |
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(i) the term of the Option shall be seven (7) years; |
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(ii) the Option shall be exercisable only while the Outside
Director remains a Director; provided, however, that for Options
granted under this Section 3.2 on or after July 21,
2004, if an Outside Director ceases to be a Director as a result
of the Outside Directors death, Disability or Retirement,
the Outside Director may exercise his or her Option granted
pursuant to this Section 3.2 within one year of such
termination (but in no event later than the expiration of the
term of such Option as set forth in the Award Agreement) and if
on the date of such termination the Outside Director is not
vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option will revert to the Plan; |
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(iii) the exercise price per Share shall be 100% of the
Fair Market Value per Share on the date of grant of the
Option; and |
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(iv) subject to accelerated vesting upon a merger or Change
in Control as specified in Section 8.4(C), the Option shall
vest and become exercisable as to 25% of the Shares subject to
the Option on the first anniversary of the date of grant of the
Option and shall vest and become exercisable as to 6.25% of the
Shares subject to the Option at the end of each three-month
period thereafter, if on such dates Participant has remained in
continuous status as a Director. |
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(C) The Plan shall not confer upon any Outside Director any
right with respect to continuation of service as a Director or
nomination to serve as a Director, nor shall it interfere in any
way with any rights which the Director or the Company may have
to terminate his or her directorship at any time. |
3.3 Term of Option. The term
of each Option shall be seven (7) years from the date of
grant or such shorter term as may be provided in the Award
Agreement. Moreover, in the case of an Incentive Stock Option
granted to a Participant who, at the time the Option is granted,
owns stock representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or
any Parent or Subsidiary, the term of the Incentive Stock Option
shall be five (5) years from the date of grant or such
shorter term as may be provided in the Award Agreement.
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3.4 Option Exercise Price and
Consideration.
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(A) Exercise Price. The per Share exercise price for
the Shares to be issued pursuant to exercise of an Option shall
be determined by the Administrator, subject to the following: |
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(i) In the case of an Incentive Stock Option |
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(1) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise
price shall be no less than 110% of the Fair Market Value per
Share on the date of grant. |
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(2) granted to any Employee other than an Employee
described in Section 3.4(A)(i)(1), the per Share exercise
price shall be no less than 100% of the Fair Market Value per
Share on the date of grant. |
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(ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant. |
3.5 Waiting Period and Exercise
Dates. At the time an Option is granted, the Administrator
shall fix the period within which the Option may be exercised
and shall determine any conditions that must be satisfied before
the Option may be exercised.
3.6 Form of Consideration.
The Administrator shall determine the acceptable form of
consideration for exercising an Option, including the method of
payment. In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of
consideration at the time of grant. Such consideration may
consist, subject to Applicable Laws, entirely of:
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(A) cash; |
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(B) check; |
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(C) other Shares, including reservation by the Company of
Shares issuable to the Participant upon exercise of an Option,
which have a Fair Market Value on the date of surrender or
reservation equal to the aggregate exercise price of the Shares
as to which such Option shall be exercised; |
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(D) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with
the Plan; |
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(E) a reduction in the amount of any Company liability to
the Participant, including any liability attributable to the
Participants participation in any Company sponsored
deferred compensation program or arrangement; |
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(F) any combination of the foregoing methods of
payment; or |
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(G) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws;
provided, however, that the issuance of a promissory note will
not be a permissible form of consideration under the Plan. |
3.7 Exercise of Option.
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(A) Procedure for Exercise; Rights as a Stockholder.
Any Option granted hereunder shall be exercisable according to
the terms of the Plan and at such times and under such
conditions as determined by the Administrator and set forth in
the Award Agreement. An Option may not be exercised for a
fraction of a Share. |
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(i) An Option shall be deemed exercised when the Company
receives: (x) written or electronic notice of exercise (in
accordance with the Award Agreement) from the person entitled to
exercise the Option, and (y) full payment for the Shares
with respect to which the Option is exercised (together with
applicable withholding taxes). Full payment may consist of any
consideration and method of payment authorized by the
Administrator and permitted by the Award Agreement and |
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the Plan. Shares issued upon exercise of an Option shall be
issued in the name of the Participant or, if requested by the
Participant, in the name of the Participant and his or her
spouse. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a stockholder shall
exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be
issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued,
except as provided in Section 8.4. |
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(ii) Exercising an Option in any manner shall decrease the
number of Shares thereafter available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised. |
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(B) Termination of Relationship as a Service Provider.
If a Participant ceases to be a Service Provider, other than
upon the Participants death or Disability, the Participant
may exercise his or her Option within such period of time as is
specified in the Award Agreement to the extent that the Option
is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the
Award Agreement). In the absence of a specified time in the
Award Agreement, the Option shall remain exercisable for three
(3) months following the Participants termination.
If, on the date of termination, the Participant is not vested as
to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after
termination, the Participant does not exercise his or her Option
within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to
the Plan. |
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(C) Disability of Participant. If a Participant
ceases to be a Service Provider as a result of the
Participants Disability, the Participant may exercise his
or her Option within such period of time as is specified in the
Award Agreement (of at least six (6) months) to the extent
the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set
forth in the Award Agreement). In the absence of a specified
time in the Award Agreement, the Option shall remain exercisable
for twelve (12) months following the Participants
termination. If, on the date of termination, the Participant is
not vested as to his or her entire Option, the Shares covered by
the unvested portion of the Option shall revert to the Plan. If,
after termination, the Participant does not exercise his or her
Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to
the Plan. |
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(D) Death of Participant. If a Participant dies
while a Service Provider, the Option may be exercised following
the Participants death within such period of time as is
specified in the Award Agreement to the extent that the Option
is vested on the date of death (but in no event may the option
be exercised later than the expiration of the term of such
Option as set forth in the Award Agreement), by the
Participants designated beneficiary, provided such
beneficiary has been designated prior to the Participants
death in a form acceptable to the Administrator. If no such
beneficiary has been designated by the Participant, then such
Option may be exercised by the personal representative of the
Participants estate or by the person(s) to whom the Option
is transferred pursuant to the Participants will or in
accordance with the laws of descent and distribution. In the
absence of a specified time in the Award Agreement, the Option
shall remain exercisable for twelve (12) months following
the Participants death. If, at the time of death, a
Participant is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If the Option is not so
exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to
the Plan. |
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(E) Retirement of Participant. If a Participant
ceases to be a Service Provider as a result of his or her
Retirement, the Participant may exercise his or her Option
within such period of time as is specified in the Award
Agreement, to the extent the Option is vested on the date of
Retirement (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). In
the absence of a specified time in the Award Agreement, for
Options granted on or after July 21, 2004, the Option |
C-9
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shall remain exercisable for twelve (12) months following
the Participants termination. If, on the date of
Retirement, the Participant is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after his or her
Retirement, the Participant does not exercise his or her Option
within the time specified herein, the Option shall terminate,
and the Shares covered by such Option shall revert to the Plan. |
Section 4. Restricted Stock
Awards
4.1 Restricted Stock Awards.
Restricted Stock Awards may be issued either alone, in addition
to, or in tandem with other Awards granted under the Plan and/or
cash awards made outside of the Plan. After the Administrator
determines that it will offer Restricted Stock Awards under the
Plan, it shall advise the offeree in writing or electronically,
by means of a Notice of Grant, of the terms, conditions and
restrictions related to the offer, including the number of
Shares that the offeree shall be entitled to purchase, the price
to be paid, and the time within which the offeree must accept
such offer. The offer shall be accepted by execution of a
Restricted Stock Award Agreement in the form determined by the
Administrator.
4.2 Term of Restricted Stock
Awards. The term of each Restricted Stock Award shall be
stated in the Restricted Stock Award Agreement. Shares of Common
Stock issued pursuant to a Restricted Stock Award may, in the
discretion of the Administrator, vest over the
Participants period of service or upon attainment of
specified performance objectives. Notwithstanding the foregoing,
subject to Section 8.4(C), a Restricted Stock Award may not
vest at a rate faster than one year following the date of grant.
If a Restricted Stock Award is not subject to achievement
of performance goals then, subject to Section 8.4(C), such
Award willfully vest over a period of at least three
(3) years from the date of grant.
4.3 Limitation on Restricted
Stock Award Grants. No Participant shall receive Restricted
Stock Awards in any Fiscal Year of the Company having an
aggregate initial value greater than $1,000,000.
4.4 Repurchase Option.
Unless the Administrator determines otherwise, the Restricted
Stock Award Agreement shall grant the Company a right of
forfeiture or repurchase option exercisable upon the voluntary
or involuntary termination of the Participants service
with the Company for any reason (including death or Disability).
The forfeiture right or repurchase option shall lapse as the
Restricted Stock Award vests.
4.5 Other Provisions. The
Restricted Stock Award Agreement shall contain such other terms,
provisions and conditions not inconsistent with the Plan as may
be determined by the Administrator in its sole discretion.
4.6 Rights as a Stockholder.
Once the Restricted Stock Award is exercised, the Participant
shall have the rights equivalent to those of a stockholder, and
shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the
Company. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the
Restricted Stock Award is exercised, except as provided in
Section 8.4.
4.7 Cancellation of Restricted
Stock Award. On the date set forth in the Restricted Stock
Award Agreement, all unearned or unvested Restricted Stock shall
be forfeited to the Company.
Section 5. Stock
Appreciation Rights
5.1 Stock Appreciation
Rights.
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(A) Grant of SARs. Subject to the terms and
conditions of the Plan, a SAR may be granted to Service
Providers at any time and from time to time as will be
determined by the Administrator, in its sole discretion. |
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(B) Number of Shares. The Administrator will have
complete discretion to determine the number of SARs granted to
any Service Provider, provided that during any Fiscal Year, no
Participant will be granted SARs covering more than
500,000 Shares. Notwithstanding the foregoing limitation,
in connection with a Participants initial service as an
Employee, an Employee may be granted SARs covering up to an
additional 500,000 Shares. |
C-10
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(C) Exercise Price and Other Terms. The
Administrator will have complete discretion to determine the
terms and conditions of SARs granted under the Plan, subject to
the provisions of the Plan and the following limitations: |
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(i) the term of an SAR may not exceed seven (7) years
from the date of grant; |
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(ii) the exercise price of an SAR must be at least 100% of
the Fair Market Value per Share on the date of grant; and |
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(iii) the maximum payment any Participant may be entitled
to receive pursuant to subsection (F) below shall not
exceed 100% of the exercise price of the underlying SAR. |
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(D) SAR Agreement. Each SAR grant will be evidenced
by an Award Agreement that will specify the exercise price, the
term of the SAR, the conditions of exercise, and such other
terms and conditions as the Administrator, in its sole
discretion, will determine. |
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(E) Expiration of SARs. An SAR granted under the
Plan will expire upon the date determined by the Administrator,
in its sole discretion, and set forth in the Award Agreement;
provided, that, the term of the SAR shall not exceed seven
(7) years. Notwithstanding the foregoing, the rules of
Sections 3.7(B), (C), and (D) also will apply to SARs. |
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(F) Payment of SAR Amount. Subject to the limitation
set out in Section 5.1 (C)(iii) above, upon the exercise of
an SAR, a Participant will be entitled to receive payment from
the Company in an amount determined by multiplying: |
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(i) The difference between the Fair Market Value of a Share
on the date of exercise over the exercise price; times |
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(ii) The number of Shares with respect to which the SAR is
exercised. |
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At the discretion of the Administrator, the payment upon SAR
exercise may be in cash, in Shares of equivalent value, or in
some combination thereof. |
Section 6. Restricted Stock
Units
6.1 Grant of Restricted Stock
Units. Restricted Stock Units may be granted to Service
Providers at any time and from time to time, as will be
determined by the Administrator, in its sole discretion. The
Administrator will have complete discretion in determining the
number of Restricted Stock Units granted to each Participant,
provided that during any Fiscal Year no Participant will receive
Restricted Stock Units having an initial value greater than
$1,000,000.
6.2 Value of Restricted
Stock. Each Restricted Stock Unit will have an initial value
that is established by the Administrator on or before the date
of grant.
6.3 Vesting. Subject to
Section 8.4(C), a Restricted Stock Unit may not vest at a
rate faster than one year following the date of grant. If a
Restricted Stock Unit is not subject to achievement of
performance goals then, subject to Section 8.4(C), such
award willfully vest over a period of at least three
(3) years from the date of grant
6.4 Performance Objectives and
Other Terms. The Administrator will set performance
objectives (including, without limitation, continued service) in
its discretion which, depending on the extent to which they are
met, will determine the number or value of Restricted Stock
Units that will be paid out to the Participants. Each Award of
Restricted Stock Units will be evidenced by an Award Agreement
that will specify the Performance Period, and such other terms
and conditions as the Administrator, in its sole discretion,
will determine.
6.5 Earning of Restricted Stock
Units. After the applicable Performance Period has ended,
the holder of Restricted Stock Units will be entitled to receive
a payout of the number of Restricted Stock Units earned by the
Participant over the Performance Period, to be determined as a
function of the extent to which the corresponding performance
objectives or other vesting provisions have been achieved. After
the grant of a
C-11
Restricted Stock Unit, the Administrator, in its sole
discretion, may reduce or waive any performance objectives or
other vesting provisions for such Restricted Stock Unit.
6.6 Form and Timing of Payment
of Restricted Stock Units. Payment of earned Restricted
Stock Units will be made as soon as practicable after the
expiration of the applicable Performance Period. The
Administrator, in its sole discretion, may pay earned Restricted
Stock Units in the form of cash, in Shares (which have an
aggregate Fair Market Value equal to the value of the earned
Restricted Stock Units at the close of the applicable
Performance Period) or in a combination thereof.
6.7 Cancellation of Restricted
Stock Units. On the date set forth in the Award Agreement,
all unearned or unvested Restricted Stock Units will be
forfeited to the Company, and again will be available for grant
under the Plan.
Section 7. Performance
Goals
Performance Goals. The granting and/or vesting of
Restricted Stock Awards or Restricted Stock Units may be made
subject to the attainment of performance goals relating to one
or more business criteria within the meaning of
Section 162(m) of the Code and may provide for a targeted
level or levels of achievement (Performance
Goals) including one or more of the following
measures: (a) Annual Revenue, (b) Cash Position,
(c) Earnings Per Share, (d) Individual Performance
Objectives (e) Net Income, (f) Operating Cash Flow,
(g) Operating Income, (h) Return on Assets,
(i) Return on Equity, (j) Return on Sales, and
(k) Total Stockholder Return. Any Performance Goals may be
used to measure the performance of the Company as a whole or a
business unit of the Company and may be measured relative to a
peer group or index. The Performance Goals may differ from
Participant to Participant and from Award to Award. Any criteria
used may be (i) measured in absolute terms,
(ii) compared to another company or companies,
(iii) measured against the performance of the Company as a
whole or a segment of the Company and/or (iv) measured on a
pre-tax or post-tax basis (if applicable). Prior to the
Determination Date, the Administrator will determine whether any
significant element(s) will be included in or excluded from the
calculation of any Performance Goal with respect to any
Participant.
Section 8. General
Provisions
8.1 Term of Plan. Subject to
Section 8.11, the Plan shall become effective on
September 24, 2003. It shall continue in effect for a term
of ten (10) years unless terminated earlier under
Section 8.6.
8.2 Transferability of
Awards. Unless determined otherwise by the Administrator, an
Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or
by the laws of descent or distribution and may be exercised,
during the lifetime of the Participant, only by the Participant.
If the Administrator, in its sole discretion, makes an Award
transferable, such Award may only be transferred (i) by
will, (ii) by the laws of descent and distribution, or
(iii) to family members (as such term is defined in the
general instructions to
Form S-8 under the
Securities Act of 1933, or any successor thereto) through gifts
or domestic relations orders, as permitted by the instructions
to Form S-8 of the
Securities Act of 1933.
8.3 Leaves of Absence.
Unless the Administrator provides otherwise, vesting of Awards
granted hereunder will not be suspended during any unpaid leave
of absence. A Service Provider will not cease to be an Employee
in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company
or between the Company, its Parent, or any Subsidiary. For
purposes of Incentive Stock Options, no such leave may exceed
ninety (90) days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. If reemployment upon
expiration of a leave of absence approved by the Company is not
so guaranteed, then three (3) months following the
91st day of such leave any Incentive Stock Option held by
the Participant will cease to be treated as an Incentive Stock
Option and will be treated for tax purposes as a Nonstatutory
Stock Option.
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8.4 Adjustments Upon Changes in
Capitalization, Merger or Change in Control.
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(A) Changes in Capitalization. Subject to any
required action by the stockholders of the Company, the number
of Shares that have been authorized for issuance under the Plan
but as to which no Awards have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an
Award, and the number of Shares as well as the price per Share
covered by each outstanding Award, and the numerical Share
limits in Sections 2, 3, 4, 5, and 6, shall
be proportionately adjusted for any change in, or increase or
decrease in the number of issued Shares, resulting from a stock
split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other change, or
increase or decrease in the number of issued Shares, effected
without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the
Company shall not be deemed to have been effected without
receipt of consideration. The Board shall make such
adjustment, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Award. |
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(B) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the
Administrator shall notify each Participant as soon as
practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for
the Participant to have the right to exercise his or her Award
prior to such transaction as to all of the Shares covered
thereby, including Shares as to which the Award would not
otherwise be exercisable. In addition, the Administrator may
provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Award shall lapse as to all
such Shares, provided the proposed dissolution or liquidation
takes place at the time and in the manner contemplated. To the
extent it has not been previously exercised, or earned, an Award
will terminate immediately prior to the consummation of such
proposed action. |
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(C) Merger or Change in Control. |
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(i) Awards. In the event of a merger of the Company
with or into another corporation, or a Change in Control, each
outstanding Award shall be assumed or an equivalent award
substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. |
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(1) In the event that the successor corporation refuses to
assume or substitute for the Award, the Participant shall fully
vest in and have the right to exercise his or her Option,
Restricted Stock Award, or Stock Appreciation Right as to all of
the Shares, including Shares as to which it would not otherwise
be vested or exercisable, and all restrictions on Restricted
Stock will lapse and all performance goals or other vesting
criteria with respect to Restricted Stock Units will be deemed
achieved at target levels and all other terms and conditions
met. In addition, if an Option, Restricted Stock Award, or Stock
Appreciation Right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a merger or Change
in Control, the Administrator shall notify the Participant in
writing or electronically that the Option, Restricted Stock
Award, or Stock Appreciation Right shall be fully vested and
exercisable for a period of not less than fifteen (15) days
from the date of such notice, and the Option, Restricted Stock
Award, or Stock Appreciation Right shall terminate upon the
expiration of such period. |
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(2) For the purposes of this Section 8.4(C)(i), an
Award shall be considered assumed if, following the merger or
Change in Control, the Award confers the right to purchase or
receive, for each Share subject to the Award immediately prior
to the merger or Change in Control (and in the case of
Restricted Stock Units, for each implied Share determined by
dividing the value of the Restricted Stock Unit by the per Share
consideration received by holders of Common Stock in the merger
or Change in Control), an amount of consideration (whether
stock, cash, or other securities or property) equal to the fair
market value of the consideration received in the merger or
Change in Control by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were
offered a choice of consideration, the type |
C-13
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of consideration chosen by the holders of a majority of the
outstanding Shares); provided, however, that if such
consideration received in the merger or Change in Control is not
solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor
corporation, provide for the consideration to be received upon
the exercise of the Option, Restricted Stock Award, or Stock
Appreciation Right, for each Share subject to such Award (or in
the case of Restricted Stock Units, the number of implied shares
determined by dividing the value of the Restricted Stock Units
by the per Share consideration received by holders of Common
Stock in the merger or Change in Control), to be solely common
stock of the successor corporation or its Parent equal in fair
market value to the per Share consideration received by holders
of Common Stock in the merger or Change in Control. |
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(3) Notwithstanding anything in Section 8.4(C)(i)(2)
to the contrary, an Award that vests, is earned or paid-out upon
the satisfaction of one or more performance goals will not be
considered assumed if the Company or its successor modifies any
of such performance goals without the Participants
consent; provided, however, a modification to such performance
goals only to reflect the successor corporations
post-merger or post-asset sale corporate structure will not be
deemed to invalidate an otherwise valid Award assumption. |
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(D) Outside Director Option Grants. Notwithstanding
anything in Section 8.4(C)(i) to the contrary, in the event
of a merger of the Company with or into another corporation, or
a Change in Control, in which an Outside Director is terminated
or asked to resign, Options granted to such Outside Director
under Section 3.2 shall vest 100% immediately prior to such
merger or Change in Control. In the event of a merger or Change
in Control in which an Outside Director is not terminated or
asked to resign, such Outside Directors Options granted
under Section 3.2 shall be treated under the terms of
Section 8.4(C)(i). |
8.5 Date of Grant. The date
of grant of an Award shall be, for all purposes, the date on
which the Administrator makes the determination granting such
Award or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to
each Participant within a reasonable time after the date of such
grant.
8.6 Amendment and Termination of
the Plan.
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(A) Amendment and Termination. The Board may at any
time amend, alter, suspend or terminate the Plan. |
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(B) Stockholder Approval. The Company shall obtain
stockholder approval of any Plan amendment to the extent
necessary and desirable to comply with Applicable Laws.
Additionally, notwithstanding anything in the Plan to the
contrary, the Board may not, without the approval of the
Companys stockholders: |
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(i) materially increase the number of shares of Common
Stock issuable under the Plan, except for permissible
adjustments in the event of certain changes in the
Companys capitalization as set forth in
Section 8.4(A); |
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(ii) materially modify the requirements for eligibility to
participate in the Plan, or |
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(iii) reprice Options issued under the Plan by lowering the
exercise price of a previously granted Award, by canceling
outstanding Options and issuing replacements, or by otherwise
replacing existing Options with substitute Options with a lower
exercise price. |
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(C) Effect of Amendment or Termination. No
amendment, alteration, suspension or termination of the Plan
shall impair the rights of any Participant, unless mutually
agreed otherwise between the Participant and the Administrator,
which agreement must be in writing and signed by the Participant
and the Company. Termination of the Plan shall not affect the
Administrators ability to exercise the powers granted to
it hereunder with respect to Awards granted under the Plan prior
to the date of such termination. |
C-14
8.7 Conditions Upon Issuance of
Shares.
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(A) Legal Compliance. Shares shall not be issued
pursuant to the exercise of an Award unless the exercise of such
Award and the issuance and delivery of such Shares shall comply
with Applicable Laws and shall be further subject to the
approval of counsel for the Company with respect to such
compliance. |
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(B) Investment Representations. As a condition to
the exercise of an Award, the Company may require the person
exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the
Company, such a representation is required. |
8.8 Inability to Obtain
Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is
deemed by the Companys counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue
or sell such Shares as to which such requisite authority shall
not have been obtained.
8.9 Reservation of Shares.
The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
8.10 Participants
Relationship with Company. Neither the Plan nor any Award
shall confer upon the Participant any right with respect to
continuing the Participants relationship as a Service
Provider with the Company, nor shall they interfere in any way
with the Participants right or the Companys right to
terminate such relationship at any time, with or without cause.
8.11 Stockholder Approval.
The Plan shall be subject to approval by the stockholders of the
Company within twelve (12) months after the date the Plan
is adopted. Such stockholder approval shall be obtained in the
manner and to the degree required under Applicable Laws.
END OF PLAN
C-15
APPENDIX D
PLANTRONICS, INC.
2002 EMPLOYEE STOCK PURCHASE PLAN.
(Board Approval: June 10, 2002)
(Shareholders Approval: July 17, 2002)
1. Purpose. The purpose of the Plan is to provide
employees of the Company and its Designated Subsidiaries with an
opportunity to purchase Common Stock of the Company through
accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an Employee Stock
Purchase Plan under Section 423 of the Internal
Revenue Code of 1986, as amended. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit
participation in a manner consistent with the requirements of
that section of the Code.
2. Definitions.
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(a) Board shall mean the Board of Directors of
the Company. |
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(b) Code shall mean the Internal Revenue Code
of 1986, as amended. |
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(c) Common Stock shall mean the Common Stock of
the Company. |
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(d) Company shall mean Plantronics, Inc., a
Delaware corporation, and any Designated Subsidiary of the
Company. |
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(e) Compensation shall mean all base straight
time gross earnings, exclusive of payments for overtime, shift
premium, incentive compensation, incentive payments, bonuses,
commissions, car allowances, profit-sharing and other
compensation. |
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(f) Designated Subsidiary shall mean any
Subsidiary that has been designated by the Board from time to
time in its sole discretion as eligible to participate in the
Plan. |
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(g) Employee shall mean any individual who is
an Employee of the Company for tax purposes whose customary
employment with the Company is at least twenty (20) hours
per week and more than five (5) months in any calendar
year. For purposes of the Plan, the employment relationship
shall be treated as continuing intact while the individual is on
sick leave or other leave of absence approved by the Company.
Where the period of leave exceeds ninety (90) days and the
individuals right to reemployment is not guaranteed either
by statute or by contract, the employment relationship shall be
deemed to have terminated on the 91st day of such leave. |
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(h) Enrollment Date shall mean the first day of
each Offering Period. |
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(i) Exercise Date shall mean the last day of
each Offering Period. |
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(j) Fair Market Value shall mean, as of any
date, the value of Common Stock determined as follows: |
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(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without
limitation the New York Stock Exchange (NYSE), its Fair Market
Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day on the date
of such determination, as reported in The Wall Street Journal
or such other source as the Board deems reliable, or; |
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(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not
reported, its Fair Market Value shall be the mean of the closing
bid and asked prices for the Common Stock on the date of such
determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable, or; |
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(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined
in good faith by the Board. |
D-1
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(k) Offering Period shall mean a period of
approximately six (6) months during which an option granted
pursuant to the Plan may be exercised. The duration of Offering
Periods may be changed pursuant to Section 4 of this Plan. |
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(l) Plan shall mean this Employee Stock
Purchase Plan. |
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(m) Purchase Price shall mean an amount equal
to 85% of the Fair Market Value of a share of Common Stock on
the Enrollment Date or on the Exercise Date, whichever is lower;
provided, however, that the Purchase Price may be adjusted by
the Board pursuant to Section 20. |
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(n) Reserves shall mean the number of shares of
Common Stock covered by each option under the Plan which have
not yet been exercised and the number of shares of Common Stock
which have been authorized for issuance under the Plan but not
yet placed under option. |
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(o) Subsidiary shall mean a corporation,
domestic or foreign, of which not less than 50% of the voting
shares are held by the Company or a Subsidiary, whether or not
such corporation now exists or is hereafter organized or
acquired by the Company or a Subsidiary. |
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(p) Trading Day shall mean a day on which
national stock exchanges and the NYSE System are open for
trading. |
3. Eligibility.
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(a) Any Employee who shall be employed by the Company on a
given Enrollment Date shall be eligible to participate in the
Plan. |
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(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under
the Plan (i) to the extent that, immediately after the
grant, such Employee (or any other person whose stock would be
attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company and/or hold
outstanding options to purchase such stock possessing five
percent (5%) or more of the total combined voting power or value
of all classes of the capital stock of the Company or of any
Subsidiary, or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase plans of the
Company and its subsidiaries accrues at a rate which exceeds
twenty-five thousand dollars ($25,000) worth of stock
(determined at the fair market value of the shares at the time
such option is granted) for each calendar year in which such
option is outstanding at any time. |
4. Offering Periods. The Plan shall be implemented
by consecutive Offering Periods with a new Offering Period
commencing on or around February 1 and August 1 of
each year, or on such other date as the Board shall determine,
and continuing thereafter until terminated in accordance with
Section 20 hereof; provided, however, that the first
Offering Period under the Plan shall commence on the first
Trading Day on or after August 1, 2002 and end on the last
Trading Day on or before January 31, 2003, and the second
Offering Period hereunder shall commence on the first Trading
Day on or after February 1, 2003 and end on the last
Trading Day on or before July 31, 2003. The Board shall
have the power to change the duration of Offering Periods
(including the commencement dates thereof) with respect to
future offerings without stockholder approval if such change is
announced at least fifteen (15) days prior to the scheduled
beginning of the first Offering Period to be affected thereafter.
5. Participation.
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(a) Enrollment. An eligible Employee may become a
participant in the Plan by completing a subscription agreement
authorizing payroll deductions to this Plan and filing it with
the Companys payroll office prior to the applicable
Enrollment Date. |
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(b) Payroll Deductions. Payroll deductions for a
participant shall commence on the first payday following the
Enrollment Date and shall end on the last payday in the Offering
Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10
hereof. |
D-2
6. Payroll Deductions.
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(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made
on each pay day during the Offering Period in an amount not less
than one percent (1.0%) and not exceeding ten percent (10.0%) of
the Compensation which he or she receives on each pay day during
the Offering Period. |
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(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be
withheld in whole percentages only. A participant may not make
any additional payments into such account. |
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(c) A participant may discontinue his or her participation
in the Plan as provided in Section 10 hereof, or may, on
one occasion during the Offering Period, decrease (but not
increase) the rate of his or her payroll deductions during the
Offering Period by completing and filing with the Company a new
subscription agreement authorizing a change in payroll deduction
rate. The change in rate shall be effective as soon as possible
after the Companys receipt of the new subscription
agreement. A participants subscription agreement shall
remain in effect for successive Offering Periods unless
terminated as provided in Section 10 hereof. |
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(d) Notwithstanding the foregoing, to the extent necessary
to comply with Section 423(b)(8) of the Code and
Section 3(b) hereof, a participants payroll
deductions may be decreased to zero percent (0%) at any time
during an Offering Period. Payroll deductions shall recommence
at the rate provided in such participants subscription
agreement at the beginning of the first Offering Period which is
scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10
hereof. |
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(e) At the time the option is exercised, in whole or in
part, or at the time some or all of the Companys Common
Stock issued under the Plan is disposed of, the participant must
make adequate provision for the Companys federal, state,
or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common
Stock. At any time, the Company may, but shall not be obligated
to, withhold from the participants compensation the amount
necessary for the Company to meet applicable withholding
obligations, including any withholding required to make
available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by the
Employee. |
7. Grant of Option. On the Enrollment Date of each
Offering Period, each eligible Employee participating in such
Offering Period shall be granted an option to purchase on the
Exercise Date of such Offering Period (at the applicable
Purchase Price) up to a number of shares of the Companys
Common Stock determined by dividing such Employees payroll
deductions accumulated prior to such Exercise Date and retained
in the Participants account as of the Exercise Date by the
applicable Purchase Price; provided that in no event shall an
Employee be permitted to purchase during each Offering Period
more than 1,000 shares (subject to any adjustment pursuant
to Section 19), and provided further that such purchase
shall be subject to the limitations set forth in
Sections 3(b) and 12 hereof. Exercise of the option shall
occur as provided in Section 8 hereof, unless the
participant has withdrawn pursuant to Section 10 hereof.
The Employee may accept the grant of such option by turning in a
completed and signed subscription agreement to the Company on or
prior to the first day of the Offering Period. The administrator
may, for future Offering Periods, increase or decrease, in its
absolute discretion, the maximum number of shares of the
Companys Common Stock an employee may purchase during an
Offering Period. Exercise of the option shall occur as provided
in Section 8 hereof, unless the participant has withdrawn
pursuant to Section 10 hereof. The option shall expire on
the last day of the Offering Period.
8. Exercise of Option. Unless a participant
withdraws from the Plan as provided in Section 10 hereof,
his or her option for the purchase of shares shall be exercised
automatically on the Exercise Date, and the maximum number of
shares subject to option shall be purchased for such participant
at the applicable Purchase Price with the accumulated payroll
deductions in his or her account. Fractional shares may be
purchased subject to the limitations set forth in
Section 3(b). Any payroll deductions accumulated in a
D-3
participants account which are in excess of the amounts
permissible for the purchase of shares authorized under
Section 3(b), shall be returned to the participant no later
than the Exercise Date of the relevant Offering Period. During a
participants lifetime, a participants option to
purchase shares hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each
Exercise Date on which a purchase of shares occurs, the Company
shall arrange the delivery to each participant, as appropriate,
the shares purchased upon exercise of his or her option.
10. Withdrawal.
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(a) A participant may withdraw all but not less than all
the payroll deductions credited to his or her account and not
yet used to exercise his or her option under the Plan at any
time by giving written notice to the Company in the form of
Exhibit B to this Plan. All of the participants
payroll deductions credited to his or her account shall be paid
to such participant promptly after receipt of notice of
withdrawal and such participants option for the Offering
Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made for such
Offering Period. If a participant withdraws from an Offering
Period, payroll deductions shall not resume at the beginning of
the succeeding Offering Period unless the participant delivers
to the Company a new subscription agreement. |
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(b) A participants withdrawal from an Offering Period
shall not have any effect upon his or her eligibility to
participate in any similar plan which may hereafter be adopted
by the Company or in succeeding Offering Periods which commence
after the termination of the Offering Period from which the
participant withdraws. |
11. Termination of Employment. Upon a
participants ceasing to be an Employee for any reason, he
or she shall be deemed to have elected to withdraw from the Plan
and the payroll deductions credited to such participants
account during the Offering Period but not yet used to exercise
the option shall be returned to such participant or, in the case
of his or her death, to the person or persons entitled thereto
under Section 15 hereof, and such participants option
shall be automatically terminated. The preceding sentence
notwithstanding, a participant who receives payment in lieu of
notice of termination of employment shall be treated as
continuing to be an Employee for the participants
customary number of hours per week of employment during the
period in which the participant is subject to such payment in
lieu of notice.
12. Interest. No interest shall accrue on the
payroll deductions of a participant in the Plan.
13. Stock.
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(a) Subject to adjustment upon changes in capitalization of
the Company as provided in Section 19 hereof, the maximum
number of shares of the Companys Common Stock which shall
be made available for sale under the Plan shall be
300,000 shares. If, on a given Exercise Date, the number of
shares with respect to which options are to be exercised exceeds
the number of shares then available under the Plan, the Company
shall make a pro rata allocation of the shares remaining
available for purchase in as uniform a manner as shall be
practicable and as it shall determine to be equitable. |
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(b) The participant shall have no interest or voting right
in shares covered by his option until such option has been
exercised. |
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(c) Shares to be delivered to a participant under the Plan
shall be registered in the name of the participant or in the
name of the participant and his or her spouse. |
14. Administration. The Plan shall be administered
by the Board or a committee of members of the Board appointed by
the Board. The Board or its committee shall have full and
exclusive discretionary authority to construe, interpret and
apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every
finding, decision and determination made by the Board or its
committee shall, to the full extent permitted by law, be final
and binding upon all parties.
D-4
15. Designation of Beneficiary.
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(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from
the participants account under the Plan in the event of
such participants death subsequent to an Exercise Date on
which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to
receive any cash from the participants account under the
Plan in the event of such participants death prior to
exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective. |
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(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the
death of a participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of
such participants death, the Company shall deliver such
shares and/or cash to the executor or administrator of the
estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such
shares and/or cash to the spouse or to any one or more
dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such
other person as the Company may designate. |
16. Transferability. Neither payroll deductions
credited to a participants account nor any rights with
regard to the exercise of an option or to receive shares under
the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent
and distribution or as provided in Section 15 hereof) by
the participant. Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect, except that
the Company may treat such act as an election to withdraw funds
from an Offering Period in accordance with Section 10
hereof.
17. Use of Funds. All payroll deductions received or
held by the Company under the Plan may be used by the Company
for any corporate purpose, and the Company shall not be
obligated to segregate such payroll deductions.
18. Reports. Individual accounts shall be maintained
for each participant in the Plan. Statements of account shall be
given to participating Employees at least annually, which
statements shall set forth the amounts of payroll deductions,
the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
19. Adjustments upon Changes in Capitalization,
Dissolution, Liquidation, Merger or Asset Sale.
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(a) Changes in Capitalization. Subject to any
required action by the stockholders of the Company, the
Reserves, the maximum number of shares each participant may
purchase per Offering Period (pursuant to Section 7), as
well as the price per share and the number of shares of Common
Stock covered by each option under the Plan which has not yet
been exercised shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been
effected without receipt of consideration. Such
adjustment shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of
shares of Common Stock subject to an option. |
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(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Offering
Period then in progress shall be shortened by setting a new
Exercise Date (the New Exercise Date), and shall
terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the
Board. The New Exercise Date shall be before the date of the
Companys proposed dissolution or liquidation. The Board
shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the
Exercise Date for the |
D-5
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participants option has been changed to the New Exercise
Date and that the participants option shall be exercised
automatically on the New Exercise Date, unless prior to such
date the participant has withdrawn from the Offering Period as
provided in Section 10 hereof. |
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(c) Merger or Asset Sale. In the event of a proposed
sale of all or substantially all of the assets of the Company,
or the merger of the Company with or into another corporation,
each outstanding option shall be assumed or an equivalent option
substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the
option, the Offering Period then in progress shall be shortened
by setting a new Exercise Date (the New Exercise
Date). The New Exercise Date shall be before the date of
the Companys proposed sale or merger. The Board shall
notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the
Exercise Date for the participants option has been changed
to the New Exercise Date and that the participants option
shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof. |
20. Amendment or Termination.
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(a) The Board of Directors of the Company may at any time
and for any reason terminate or amend the Plan. Except as
provided in Section 19 hereof, no such termination can
affect options previously granted, provided that an Offering
Period may be terminated by the Board of Directors on any
Exercise Date if the Board determines that the termination of
the Offering Period or the Plan is in the best interests of the
Company and its stockholders. Except as provided in
Section 19 and Section 20 hereof, no amendment may
make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent
necessary to comply with Section 423 of the Code (or any
other applicable law, regulation or stock exchange rule), the
Company shall obtain shareholder approval in such a manner and
to such a degree as required. |
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(b) Without stockholder consent and without regard to
whether any participant rights may be considered to have been
adversely affected, the Board (or its committee)
shall be entitled to change the Offering Periods, limit the
frequency and/or number of changes in the amount withheld during
an Offering Period, establish the exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars,
permit payroll withholding in excess of the amount designated by
a participant in order to adjust for delays or mistakes in the
Companys processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that
amounts applied toward the purchase of Common Stock for each
participant properly correspond with amounts withheld from the
participants Compensation, and establish such other
limitations or procedures as the Board (or its committee)
determines in its sole discretion advisable which are consistent
with the Plan. |
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(c) In the event the Board determines that the ongoing
operation of the Plan may result in unfavorable financial
accounting consequences, the Board may, in its discretion and,
to the extent necessary or desirable, modify or amend the Plan
to reduce or eliminate such accounting consequence including,
but not limited to: |
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(i) altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change
in Purchase Price; |
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(ii) shortening any Offering Period so that Offering Period
ends on a new Exercise Date, including an Offering Period
underway at the time of the Board action; and |
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(iii) allocating shares. |
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(d) Such modifications or amendments shall not require
stockholder approval or the consent of any Plan participants. |
D-6
21. Notices. All notices or other communications by
a participant to the Company under or in connection with the
Plan shall be deemed to have been duly given when received in
the form specified by the Company at the location, or by the
person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares.
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(a) Shares shall not be issued with respect to an option
unless the exercise of such option and the issuance and delivery
of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, and the requirements of any
stock exchange upon which the shares may then be listed, and
shall be further subject to the approval of counsel for the
Company with respect to such compliance. |
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(b) As a condition to the exercise of an option, the
Company may require the person exercising such option to
represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is
required by any of the aforementioned applicable provisions of
law. |
23. Term of Plan. The Plan shall become effective
upon the earlier to occur of its adoption by the Board of
Directors or its approval by the stockholders of the Company. It
shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 20 hereof.
END OF PLAN
D-7
APPENDIX E
PLANTRONICS, INC.
REGULAR, SUPPLEMENTAL AND OVER ACHIEVEMENT PERFORMANCE BONUS
PLAN
1) Purposes of the Plan. The Plan is intended to
increase shareholder value and the success of the Company by
motivating key executives (1) to perform to the best of
their abilities, and (2) to achieve the Companys
objectives. The Plans goals are to be achieved by
providing such executives with incentive awards based on the
achievement of goals relating to the performance of the Company
or upon the achievement of objectively determinable individual
performance goals. The Plan is intended to permit the payment of
bonuses that may qualify as performance-based compensation under
Code section 162(m).
2) Definitions.
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Annual Revenue means the Companys or a
business units net sales for the Fiscal Year, determined
in accordance with generally accepted accounting principles. |
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Award means, with respect to each
Participant, the award determined pursuant to Section 8(a)
below for a Performance Period. Each Award is determined by a
Payout Formula for a Performance Period, subject to the
Committees authority under Section 8(a) to eliminate
or reduce the Award otherwise payable. |
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Base Salary means as to any Performance
Period, the Participants annualized salary rate on the
last day of the Performance Period. Such Base Salary shall be
before both (a) deductions for taxes or benefits, and
(b) deferrals of compensation pursuant to Company-sponsored
plans. |
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Board means the Board of Directors of the
Company. |
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Cash Position means the Companys level
of cash and cash equivalents. |
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Code means the Internal Revenue Code of 1986,
as amended. |
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Committee means the Compensation Committee of
the Board, or a sub-committee of the Compensation Committee,
which shall, with respect to payments hereunder intended to
qualify as performance-based compensation under Code
Section 162(m), consist solely of two or more members of
the Board who are not employees of the Company and who otherwise
qualify as outside directors within the meaning of
Section 162(m). |
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Company means Plantronics, Inc. or any of its
subsidiaries (as such term is defined in Code
Section 424(f)). |
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Determination Date means the latest possible
date that will not jeopardize a Target Award or Awards
qualification as Performance-Based Compensation. |
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Earnings Per Share means as to any Fiscal
Year, the Companys or a business units Net Income,
divided by a weighted average number of common shares
outstanding and dilutive common equivalent shares deemed
outstanding, determined in accordance with generally accepted
accounting principles. |
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Fiscal Year means a fiscal year of the
Company. |
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Individual Performance Objective means any
individual Company business-related objective that is
objectively determinable within the meaning of Code
Section 162(m) and the Treasury Regulations promulgated
thereunder. Individual Performance Objectives shall include, but
not be limited to, improvement in customer satisfaction, and
similar objectively determinable performance objectives related
to the Participants job responsibilities with the Company. |
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Maximum Award means as to any Participant for
any Performance Period, $2 million. |
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Net Income means as to any Fiscal Year, the
income after taxes of the Company for the Fiscal Year determined
in accordance with generally accepted accounting principles. |
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Operating Cash Flow means the Companys
or a business units sum of Net Income plus depreciation
and amortization plus changes in working capital comprised of
accounts receivable, inventories, other current assets, trade
accounts payable, accrued expenses, product warranty, advance
payments from customers and long-term accrued expenses,
determined in accordance with generally acceptable accounting
principles. |
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Operating Income means the Companys or
a business units income from operations determined in
accordance with generally accepted accounting principles. |
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Participant means an eligible executive or
key employee of the Company participating in the Plan for a
Performance Period. |
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Payout Formula means as to any Performance
Period, the formula or payout matrix established by the
Committee pursuant to Section 7 in order to determine the
Awards (if any) to be paid to Participants. The formula or
matrix may differ from Participant to Participant. |
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Performance-Based Compensation means
compensation that is intended to qualify as
performance-based compensation within the meaning of
Section 162(m). |
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Performance Goals means the goal(s) (or
combined goal(s)) determined by the Committee (in its
discretion) to be applicable to a Participant with respect to an
Award. As determined by the Committee, the Performance Goals
applicable to an Award may provide for a targeted level or
levels of achievement using one or more of the following
measures: (a) Annual Revenue, (b) Cash Position,
(c) Earnings Per Share, (d) Net Income,
(e) Operating Cash Flow, (f) Operating Income,
(g) Return on Assets, (h) Return on Equity,
(i) Return on Sales, (j) Total Stockholder Return, and
(k) Individual Performance Objectives. The Performance
Goals may differ from Participant to Participant and from Award
to Award. Prior to the Determination Date, the Committee shall
determine whether any significant element(s) shall be included
in or excluded from the calculation of any Performance Goal with
respect to any Participants. |
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Performance Period means any Fiscal Year or
such other period longer than a Fiscal Year but not in excess of
three Fiscal Years, as determined by the Committee in its sole
discretion. |
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Plan means this Performance Bonus Plan. |
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Plan Year means the Companys fiscal
year. |
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Return on Assets means the percentage equal
to the Companys or a business units Operating Income
before incentive compensation, divided by average net Company or
business unit, as applicable, assets, determined in accordance
with generally accepted accounting principles. |
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Return on Equity means the percentage equal
to the Companys Net Income divided by average
shareholders equity, determined in accordance with
generally accepted accounting principles. |
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Return on Sales means the percentage equal to
the Companys or a business units Operating Income
before incentive compensation, divided by the Companys or
the business units, as applicable, revenue, determined in
accordance with generally accepted accounting principles. |
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Section 162(m) means Section 162(m)
of the Code, or any successor to Section 162(m), as that
Section may be interpreted from time to time by the Internal
Revenue Service, whether by regulation, notice or otherwise. |
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Target Award means the target award payable
under the Plan to a Participant for the Performance Period,
expressed as a percentage of his or her Base Salary or a
specific dollar amount, as determined by the Committee in
accordance with Section 6. |
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Total Stockholder Return means the total
return (change in share price plus reinvestment of any
dividends) of a share of the Companys common stock. |
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3) Plan Administration.
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a) The Committee shall be responsible for the general
administration and interpretation of the Plan and for carrying
out its provisions. Subject to the requirements for qualifying
compensation as Performance-Based Compensation, the Committee
may delegate specific administrative tasks to Company employees
or others as appropriate for proper administration of the Plan.
Subject to the limitations on Committee discretion imposed under
Section 162(m), the Committee shall have such powers as may
be necessary to discharge its duties hereunder, including, but
not by way of limitation, the following powers and duties, but
subject to the terms of the Plan: |
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i) discretionary authority to construe and interpret the
terms of the Plan, and to determine eligibility, Awards and the
amount, manner and time of payment of any Awards hereunder; |
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ii) to prescribe forms and procedures for purposes of Plan
participation and distribution of Awards; and |
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iii) to adopt rules, regulations and bylaws and to take
such actions as it deems necessary or desirable for the proper
administration of the Plan. |
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b) Any rule or decision by the Committee that is not
inconsistent with the provisions of the Plan shall be conclusive
and binding on all persons, and shall be given the maximum
deference permitted by law. |
4) Eligibility. The employees eligible to
participate in the Plan for a given Performance Period shall be
executive officers and other key employees of the Company who
are designated by the Committee in its sole discretion. No
person shall be automatically entitled to participate in the
Plan.
5) Performance Goal Determination. The Committee, in
its sole discretion, shall establish the Performance Goals for
each Participant for the Performance Period. Such Performance
Goals shall be set forth in writing prior to the Determination
Date.
6) Target Award Determination. The Committee, in its
sole discretion, shall establish a Target Award for each
Participant. Each Participants Target Award shall be
determined by the Committee in its sole discretion, and each
Target Award shall be set forth in writing prior to the
Determination Date.
7) Determination of Payout Formula or Formulae. On
or prior to the Determination Date, the Committee, in its sole
discretion, shall establish a Payout Formula or Formulae for
purposes of determining the Award (if any) payable to each
Participant. Each Payout Formula shall (a) be set forth in
writing prior to the Determination Date, (b) be based on a
comparison of actual performance to the Performance Goals,
(c) provide for the payment of a Participants Target
Award if the Performance Goals for the Performance Period are
achieved, and (d) provide for an Award greater than or less
than the Participants Target Award, depending upon the
extent to which actual performance exceeds or falls below the
Performance Goals. Notwithstanding the preceding, in no event
shall a Participants Award for any Performance Period
exceed the Maximum Award.
8) Determination of Awards; Award Payment.
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a) Determination and Certification. After the end of
each Performance Period, the Committee shall certify in writing
(which may be by approval of the minutes in which the
certification was made) the extent to which the Performance
Goals applicable to each Participant for the Performance Period
were achieved or exceeded. The Award for each Participant shall
be determined by applying the Payout Formula to the level of
actual performance that has been certified by the Committee.
Notwithstanding any contrary provision of the Plan, the
Committee, in its sole discretion, may eliminate or reduce the
Award payable to any Participant below that which otherwise
would be payable under the Payout Formula. |
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(b) Right to Receive Payment. Each Award under the
Plan shall be paid solely from the general assets of the
Company. Nothing in this Plan shall be construed to create a
trust or to establish or evidence |
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any Participants claim of any right to payment of an Award
other than as an unsecured general creditor with respect to any
payment to which he or she may be entitled. |
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(c) Form of Distributions. The Company shall
distribute all Awards to the Participant in cash. |
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(d) Timing of Distributions. Subject to
Section 8(e) below, the Company shall distribute amounts
payable to Participants as soon as is practicable following the
determination and written certification of the Award for a
Performance Period, but in no event later than 90 days
after the end of the applicable Performance Period. |
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(e) Deferral. The Committee may defer payment of
Awards, or any portion thereof, to Covered Employees as the
Committee, in its discretion, determines to be necessary or
desirable to preserve the deductibility of such amounts under
Section 162(m). In addition, the Committee, in its sole
discretion, may permit a Participant to defer receipt of the
payment of cash that would otherwise be delivered to a
Participant under the Plan. Any such deferral elections shall be
subject to such rules and procedures as shall be determined by
the Committee in its sole discretion. |
9) Term of Plan. The Plan shall first apply to the
Companys 2007 Plan Year. The Plan shall terminate with
respect to the 2007 Plan Year and all subsequent Plan Years
unless it is approved at the 2006 annual meeting of the
Companys shareholders. Once approved by the Companys
shareholders, the Plan shall continue until terminated under
Section 10 of the Plan.
10) Amendment and Termination of the Plan. The
Committee may amend, modify, suspend or terminate the Plan, in
whole or in part, at any time, including the adoption of
amendments deemed necessary or desirable to correct any defect
or to supply omitted data or to reconcile any inconsistency in
the Plan or in any Award granted hereunder; provided, however,
that no amendment, alteration, suspension or discontinuation
shall be made which would (i) impair any payments to
Participants made prior to such amendment, modification,
suspension or termination, unless the Committee has made a
determination that such amendment or modification is in the best
interests of all persons to whom Awards have theretofore been
granted; provided further, however, that in no event may such an
amendment or modification result in an increase in the amount of
compensation payable pursuant to such Award or (ii) cause
compensation that is, or may become, payable hereunder to fail
to qualify as Performance-Based Compensation. To the extent
necessary or advisable under applicable law, including
Section 162(m), Plan amendments shall be subject to
shareholder approval. At no time before the actual distribution
of funds to Participants under the Plan shall any Participant
accrue any vested interest or right whatsoever under the Plan
except as otherwise stated in this Plan.
11) Withholding. Distributions pursuant to this Plan
shall be subject to all applicable federal and state tax and
withholding requirements.
12) At-Will Employment. No statement in this Plan
should be construed to grant any employee an employment contract
of fixed duration or any other contractual rights, nor should
this Plan be interpreted as creating an implied or an expressed
contract of employment or any other contractual rights between
the Company and its employees. The employment relationship
between the Company and its employees is terminable at-will.
This means that an employee of the Company may terminate the
employment relationship at any time and for any reason or no
reason.
13) Successors. All obligations of the Company under
the Plan, with respect to awards granted hereunder, shall be
binding on any successor to the Company, whether the existence
of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or
substantially all of the business or assets of the Company.
14) Indemnification. Each person who is or shall
have been a member of the Committee, or of the Board, shall be
indemnified and held harmless by the Company against and from
(a) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection
with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be
involved by reason of any action taken or failure to act under
the Plan or any award, and (b) from any and all
E-4
amounts paid by him or her in settlement thereof, with the
Companys approval, or paid by him or her in satisfaction
of any judgment in any such claim, action, suit, or proceeding
against him or her, provided he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not
be exclusive of any other rights of indemnification to which
such persons may be entitled under the Companys
Certificate of Incorporation or Bylaws, by contract, as a matter
of law, or otherwise, or under any power that the Company may
have to indemnify them or hold them harmless.
15) Nonassignment. The rights of a Participant under
this Plan shall not be assignable or transferable by the
Participant except by will or the laws of intestacy.
16) Governing Law. The Plan shall be governed by the
laws of the State of California.
END OF PLAN
E-5
This PROXY is solicited on behalf of the Board of Directors of
PLANTRONICS, INC.
2006 ANNUAL MEETING OF STOCKHOLDERS
July 26, 2006
The undersigned stockholder of PLANTRONICS, INC., a Delaware corporation, hereby acknowledges
receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated June 16,
2006, and hereby appoints S. Kenneth Kannappan, Barbara V. Scherer, and Richard R. Pickard, and
each of them, proxies and attorneys-in-fact, with full power to each of substitution, on behalf and
in the name of the undersigned, to represent the undersigned at the 2006 Annual Meeting of
Stockholders of PLANTRONICS, INC. to be held on July 26, 2006 at 10:00 a.m. PDT, at 345 Encinal
Street, Santa Cruz, California 95060, and at any adjournment or adjournments thereof, and to vote
all shares of Common Stock which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth on the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED (1)
FOR EACH OF THE NOMINEES FOR THE BOARD OF DIRECTORS LISTED IN THIS PROXY STATEMENT, (2) FOR THE
RATIFICATION AND APPROVAL OF AN INCREASE OF 1.8 MILLION SHARES IN THE COMMON STOCK ISSUABLE UNDER
THE 2003 STOCK PLAN, (3) FOR THE RATIFICATION AND APPROVAL OF AN INCREASE OF 200,000 SHARES IN THE
COMMON STOCK ISSUABLE UNDER THE 2002 EMPLOYEE STOCK PURCHASE PLAN, (4) FOR THE APPROVAL OF THE
PERFORMANCE BONUS PLAN, AND (5) FOR THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM, TO AUDIT THE CONSOLIDATED FINANCIAL STATEMENTS OF PLANTRONICS
FOR ITS FISCAL 2007, AND AS SAID PROXY HOLDERS DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
To vote through the Internet or by telephone, please see the instructions on the
backside of this card. To vote by mail, please sign and date this card on the reverse and mail
promptly in the enclosed postage-paid envelope.
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SEE REVERSE SIDE |
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CONTINUED AND TO BE SIGNED ON REVERSE SIDE |
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SEE REVERSE SIDE |
PLANTRONICS, INC.
345 ENCINAL STREET
SANTA CRUZ, CA 95060
VOTE
BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for
electronic delivery of information up until 11:59 P.M.
Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you access the web site and
follow the instructions to obtain your records and to create
an electronic voting instruction form.
ELECTRONIC
DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by
PLANTRONICS, INC. in mailing proxy materials, you can consent
to receiving all future proxy statements, proxy cards and
annual reports electronically via e-mail or the Internet. To
sign up for electronic delivery, please follow the
instructions above to vote using the Internet and, when
prompted, indicate that you agree to receive or access
stockholder communications electronically in future years.
VOTE
BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time the day before
the cut-off date or meeting date. Have your proxy card in
hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to
PLANTRONICS, INC., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PLANTRONICS, INC.
The Board of Directors recommends a vote FOR
Items 1, 2, 3, 4 and 5.
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Vote on Directors |
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Election of Directors. |
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Nominees. |
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(01) Marv Tseu |
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(05) Trude Taylor |
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(02) Ken Kannappan |
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(06) Roger Wery |
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(03) Gregg Hammann |
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(07) John Hart |
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(04) Marshall Mohr |
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For All |
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Withhold All |
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For All Except |
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To withhold authority to vote for any individual nominee, mark For All Except and write the nominees name on the line below. |
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For
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Against
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Abstain |
Vote on Proposals |
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Proposal to ratify and approve an increase of
1.8 million shares in the Common Stock issuable
under the 2003 Stock Plan and to be used solely for
stock option grant awards.
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3.
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Proposal to ratify and approve an increase of
200,000 shares in the Common Stock issuable under the
2002 Employee Stock Purchase Plan.
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4.
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Proposal to approve the Performance Bonus Plan.
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Proposal to ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for fiscal 2007. |
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And, in their discretion, upon such other matter or matters which may properly come before the Annual Meeting or any adjournment or adjournments thereof. |
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For address changes and/or comments, please check this box and
write them on the back where indicated.
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Please indicate if you plan to attend this meeting. |
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Yes |
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No |
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Signature [PLEASE SIGN WITHIN BOX] |
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Signature (Joint Owners) |
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