Black Box Corporation DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Black Box Corporation
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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BLACK BOX CORPORATION
1000 Park Drive
Lawrence, Pennsylvania 15055
Notice of Annual Meeting of Stockholders
to be held on August 8, 2006
To the Stockholders of
Black Box Corporation:
The Annual Meeting of Stockholders (the Annual
Meeting) of Black Box Corporation (the
Company) will be held at the offices of the Company
at 1000 Park Drive, Lawrence, Pennsylvania 15055 on
Tuesday, August 8, 2006, at 12:30 p.m. Eastern
Daylight Time, to consider and act upon the following matters:
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1. |
The election of six (6) members of the Board of Directors; |
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2. |
The approval of an amendment to the 1992 Stock Option Plan to
increase the number of shares authorized under that Plan; |
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3. |
The approval of an amendment to the 1992 Director Stock
Option Plan to increase the number of shares authorized under
that Plan; and |
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4. |
Ratification of the appointment of BDO Seidman, LLP as the
independent registered public accounting firm of the Company for
the fiscal year ending March 31, 2007. |
Stockholders also will be asked to consider such other matters
as may properly come before the Annual Meeting. The Board of
Directors has established the close of business on Friday,
June 9, 2006 as the record date for the determination of
the stockholders entitled to notice of and to vote at the Annual
Meeting.
IT IS REQUESTED, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, THAT YOU COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
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BY ORDER OF THE BOARD OF DIRECTORS |
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Michael McAndrew, Secretary |
June 27, 2006
TABLE OF CONTENTS
BLACK BOX CORPORATION
1000 Park Drive
Lawrence, Pennsylvania 15055
PROXY STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS
August 8, 2006
This Proxy Statement is being furnished to the holders of common
stock, par value $.001 per share (Common
Stock), of Black Box Corporation, a Delaware
corporation (the Company), in connection with the
solicitation by the Board of Directors of the Company (the
Board of Directors or the Board) of
proxies to be voted at the annual meeting of stockholders (the
Annual Meeting) scheduled to be held on Tuesday,
August 8, 2006, at 12:30 p.m. Eastern Daylight Time,
at the offices of the Company at 1000 Park Drive, Lawrence,
Pennsylvania 15055, or at any adjournment thereof. This Proxy
Statement and form of proxy were first mailed to stockholders on
or about June 29, 2006. A copy of the Companys Annual
Report to Stockholders for the fiscal year ended March 31,
2006 (Fiscal 2006) is being furnished with this
Proxy Statement.
Only holders of Common Stock of record as of the close of
business on Friday, June 9, 2006 are entitled to notice of
and to vote at the Annual Meeting and any adjournment thereof.
On that date, 17,676,970 shares of Common Stock, each
entitled to one vote per share, were outstanding.
All shares of Common Stock represented by valid proxies received
by the Secretary of the Company prior to the Annual Meeting will
be voted as specified in the form of proxy. If no specification
is made, the shares will be voted FOR the election of each of
the Boards nominees to the Board of Directors and each of
the other matters submitted by the Board of Directors for vote
by the stockholders. Unless otherwise indicated by the
stockholder, the proxy card also confers discretionary authority
on the Board-appointed proxies to vote the shares represented by
the proxy on any matter that is properly presented for action at
the Annual Meeting of which management had no knowledge prior to
the mailing of this Proxy Statement. A stockholder giving a
proxy has the power to revoke it at any time prior to its
exercise by delivering to the Secretary of the Company a written
revocation or a duly executed proxy bearing a later date
(although no revocation shall be effective until actual notice
thereof has been given to the Secretary of the Company), or by
attending the meeting and voting his or her shares in person.
Under the Companys Second Restated Certificate of
Incorporation, as amended (the Certificate of
Incorporation), Amended and Restated
By-laws (the
By-laws)
and applicable state law, abstentions and broker non-votes
(which arise from proxies delivered by brokers and others, where
the record holder has not received direction on voting and does
not have discretionary authority to vote on one or more matters)
are each included in the determination of the number of shares
present for purposes of determining a quorum. At the Annual
Meeting, directors will be elected by a plurality vote and all
other matters will be decided by the affirmative vote of a
majority of the votes cast. Abstentions and broker non-votes are
not votes cast and will not be included in calculating the
number of votes necessary for approval of the matter.
The Board of Directors unanimously recommends a vote FOR
each of the nominees named below for election as director, FOR
approval of an amendment to increase the number of shares
authorized under the 1992 Stock Option Plan, FOR approval of an
amendment to increase the number of shares authorized under the
1992 Director Stock Option Plan and FOR ratification of the
appointment of BDO Seidman, LLP as the independent registered
public accounting firm of the Company for the fiscal year ending
March 31, 2007.
ANNUAL MEETING MATTERS
Proposal 1 Election of Directors
The By-laws provide
that the number of directors constituting the entire Board shall
be nine (9), or such other number as shall be fixed by the
stockholders or by the Board of Directors. At present, the Board
has fixed the number of directors at six (6) members. All
directors are independent under the listing standards of the
Nasdaq National Market (Nasdaq) except for Fred C.
Young as a result of his position as the Companys Chief
Executive Officer.
All directors of the Company stand for election each year. The
Board has nominated six (6) persons for election to the
Board at the Annual Meeting. Therefore, six (6) directors
are to be elected at the Annual Meeting to hold office for a
term of one (1) year and until their respective successors
are elected and qualified, subject to the right of the
stockholders to remove any director as provided in the
By-laws. The
stockholders may fill any vacancy in the office of a director.
In the absence of a stockholder vote, a vacancy in the office of
a director may be filled by the remaining directors then in
office, even if less than a quorum, or by the sole remaining
director. Any director elected by the Board of Directors to fill
a vacancy shall serve until his or her successor is elected or
until his or her earlier death, resignation or removal. If the
Board of Directors increases the number of directors, the Board
of Directors may fill any vacancy so created.
The holders of Common Stock have one vote for each share owned
as of the record date in the election of directors. The six
(6) nominees receiving the greatest number of affirmative
votes will be elected as directors for terms expiring in 2007.
The persons named as proxies on the enclosed proxy card were
selected by the Board of Directors and have advised the Board of
Directors that, unless authority is withheld, they intend to
vote the shares represented by them at the Annual Meeting for
the election of the following nominees to the Board of
Directors: William F. Andrews, Richard L. Crouch, Thomas W.
Golonski, Thomas G. Greig, Edward A. Nicholson, Ph.D. and
Fred C. Young. All of the nominees presently serve as directors
of the Company.
The Board of Directors knows of no reason why any nominee for
director would be unable to serve as director. If, at the time
of the Annual Meeting, any of the named nominees is unable or
unwilling to serve as a director of the Company, the persons
named as proxies intend to vote for such substitute as may be
nominated by the Board of Directors.
The following sets forth certain information concerning the
Companys nominees for election to the Board of Directors
at the Annual Meeting:
William F. Andrews, 74, was elected a director of
the Company on May 18, 1992. Mr. Andrews currently is
Chairman of Corrections Corporation of America (private prisons)
and Chairman of Katy Industries, Inc. (diversified manufacturing
company). He was Chairman of Scovill Fasteners, Inc. and
Northwestern Steel and Wire from 1996 to 2001. He has been a
principal with Kohlberg & Co., a private investment
company, since 1995. He is also a director of Corrections
Corporation, Katy Industries, OCharleys, Inc. and
Trex Company, Inc., all publicly-held companies.
Richard L. Crouch, 59, was elected a director of
the Company on August 10, 2004. Mr. Crouch was a
General Partner with the firm of PricewaterhouseCoopers LLP from
1979 to 2004, having served as an Audit Partner principally
assigned to public companies. He served in various capacities
for the firm, including service as a regional accounting,
auditing and Securities and Exchange Commission services
consultant. He retired from the firm on July 2, 2004.
Thomas W. Golonski, 63, was selected to be a
director of the Company on February 11, 2003 and was
elected by the stockholders on August 12, 2003.
Mr. Golonski served as Chairman, President and Chief
Executive Officer of National City Bank of Pennsylvania and
Executive Vice President of National City Corporation from 1996
to 2005. He retired from National City in 2005. He is a director
of several economic development organizations and active in
other charitable and financial organizations.
2
Thomas G. Greig, 58, was elected a director of the
Company on August 10, 1999 and appointed as non-executive
Chairman of the Board in May 2004. Mr. Greig has been a
Managing Director of Liberty Capital Partners, a private equity
partnership, since 1998. He is also a director of publicly-held
Rudolph Technologies, Inc., a number of privately-held companies
and a public, not-for-profit foundation.
Edward A. Nicholson, Ph.D., 66, was elected a
director of the Company on August 10, 2004.
Dr. Nicholson served as President of Robert Morris
University from 1989 to 2005 and is presently a Professor of
Management at Robert Morris. He has served a number of
businesses and government agencies as a consultant in the areas
of long-range planning, organization design and labor relations.
He is also a director of publicly-held Shopsmith Inc. and
several regional economic, charitable and cultural organizations.
Fred C. Young, 50, was elected a director of the
Company on December 18, 1995, President on May 9, 1997
and Chairman and Chief Executive Officer on June 24, 1998.
Mr. Young served as Chairman until May 2004 when
Mr. Greig was appointed as non-executive Chairman of the
Board. He served as Chief Operating Officer from May 1996 until
June 1998 and Chief Financial Officer and Treasurer from 1991
until May 1997 and was Secretary from 1991 until May 1999. He is
also a director of Citizens Bank of Pennsylvania.
Proposal 2 Approval of Increase to 1992
Stock Option Plan Shares
In November 1992, the Board of Directors and stockholders
adopted the 1992 Stock Option Plan (the Employee
Plan). The Employee Plan constitutes a key element of the
Companys total compensation program. This plan is designed
to motivate key employees of the Company to remain focused on
long-term stockholder value performance.
As a result of prior grants of stock options under the Employee
Plan, the number of shares of Common Stock available for the
grant of stock options or stock appreciation rights as of
May 31, 2006 was 39,068. In order to maintain the
Companys pay-for-performance compensation philosophy, the
Board has adopted and proposes that the stockholders approve an
amendment to the Employee Plan which will increase the total
number of shares available for the grant of stock options or
stock appreciation rights under the Employee Plan by
630,000 shares. The aggregate number of shares will
increase from 9,200,000 to 9,830,000.
The Board believes that the increase in the number of shares
available for issuance under the Employee Plan will:
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Support the Companys strategy of using stock options as a
key component of an employees total compensation. The
Companys philosophy is to be conservative with the cash
component of total compensation, make a significant portion of
total compensation at-risk and variable and tie the at-risk,
variable portion to overall Company stock performance through
grants of stock options. |
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Strengthen the Companys ability to retain key employees
and motivate such employees to remain focused on long-term
stockholder value performance. |
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Continue to provide benefit to employees only when stock
appreciation is realized as shares are issued at fair market
value at the date of grant. |
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Support the intention of the Employee Plan to serve as a
post-retirement benefit program. Generally, the Company does not
have a Company-funded post-retirement medical benefits program
or a defined benefit pension program for its key employees.
Therefore, the Employee Plan can serve to cover the cost of
these types of post-retirement benefits. This program design is
consistent with the Companys overall philosophy of
pay-for-performance. |
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The Company has analyzed the impact of outstanding stock
options, including the proposed increase in the number of shares
of Common Stock available for the grant of stock options or
stock appreciation rights under the Employee Plan, and has
determined that the dilutive impact of outstanding options,
including such increase, is within certain investor-based
guidelines and lower than the average dilutive impact for
companies in its industry group. |
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As of May 31, 2006, 85% of the total outstanding options
granted to current employees were vested. Consequently, the
Board believes that the key employees continue to retain their
options as they are personally committed to the Companys
long-term profit goals and subsequent opportunity for stock
appreciation, thereby aligning their financial goals with those
of the stockholders. Because of the retention of vested options,
the number of shares outstanding attributable to the Employee
Plan is higher than if employees were to have exercised such
options and sold the shares. |
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Provide additional free cash flow to the Company as options are
exercised from time to time. The Company has utilized cash
generated from operating activities and cash from stock option
exercises to repurchase 6.9 million shares of Common
Stock for approximately $297 million through its stock
repurchase program initiated in April 1999. |
For the above stated reasons, the Board believes that the
proposed increase is appropriate.
The affirmative vote of a majority of the votes cast in person
or by proxy at the Annual Meeting is required to approve this
amendment to the Employee Plan. Unless otherwise directed by the
stockholders, proxies will be voted FOR this proposal.
Because one of the members of the Board of Directors, as an
executive officer, is eligible to receive awards under the
Employee Plan, he may be deemed to have a personal interest in
the adoption of this proposal.
The Board of Directors unanimously recommends that the
stockholders vote FOR approval of Proposal 2.
Proposal 3 Approval of Increase to
1992 Director Stock Option Plan Shares
In November 1992, the Board of Directors and stockholders
adopted the 1992 Director Stock Option Plan (the
Director Plan). The Director Plan constitutes a key
element of the Companys incentive program that is utilized
to attract and retain the services of persons capable of filling
director positions of the Company.
As a result of prior grants of stock options under the Director
Plan, the number of shares of Common Stock available for the
grant of stock options or stock appreciation rights as of
May 31, 2006 was 27,884. In order to maintain the
Companys incentive plan to attract and retain directors,
the Board has adopted and proposes that the stockholders approve
an amendment to the Director Plan which will increase the total
number of shares available for the grant of stock options or
stock appreciation rights under the Director Plan by
20,000 shares. The aggregate number of shares will increase
from 250,000 to 270,000.
The Board believes that the increase in the number of shares
available for issuance under the Director Plan will:
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Maintain the Companys ability to attract and retain
directors capable of filling such positions. |
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Motivate directors to remain focused on long-term stockholder
value performance, benefit directors only when stock
appreciation is realized and provide free cash flow to the
Company all in the same manner as previously described in
relation to the Employee Plan. |
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Support the Companys philosophy of using at-risk, variable
compensation as a key component of a directors total
compensation. This enables the Company to remain conservative
relative to the fixed fees paid to directors and maintain
consistency with the compensation philosophy the Company has
adopted for its employees. |
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The Company has analyzed the impact of outstanding stock
options, including the proposed increase in the number of shares
of Common Stock available for the grant of stock options or
stock appreciation rights under the Director Plan, and has
determined that the dilutive impact of outstanding options,
including such increase, is within certain investor-based
guidelines and lower than the average dilutive impact for
companies in its industry group. |
For the above stated reasons, the Board believes that the
proposed increase is appropriate.
4
The affirmative vote of a majority of the votes cast in person
or by proxy at the Annual Meeting is required to approve this
amendment to the Director Plan. Unless otherwise directed by the
stockholders, proxies will be voted FOR this proposal.
Because non-employee directors are eligible to receive awards
under the Director Plan, each of them may be deemed to have a
personal interest in the adoption of this proposal.
The Board of Directors unanimously recommends that the
stockholders vote FOR approval of Proposal 3.
Proposal 4 Ratification of Appointment
of Independent Registered Public Accounting Firm
In June 2006, the Audit Committee of the Board of Directors
appointed BDO Seidman, LLP (BDO) as the independent
registered public accounting firm of the Company for the fiscal
year ending March 31, 2007. As a sound governance matter,
the Audit Committee has determined to submit the appointment to
stockholders for ratification at the Annual Meeting.
The affirmative vote of a majority of the votes cast in person
or by proxy at the Annual Meeting is required for the
ratification by the Companys stockholders of such
appointment. Unless otherwise directed by the stockholders,
proxies will be voted FOR the ratification of the appointment of
BDO as the independent registered public accounting firm of the
Company for the fiscal year ending March 31, 2007. In the
event that this appointment is not ratified by the stockholders,
the Audit Committee will consider this vote in determining its
future appointment of the Companys independent registered
public accounting firm. Even if the appointment is ratified, the
Audit Committee in its discretion may change the appointment at
any time during the year if it determines that such change would
be in the best interests of the Company and its stockholders.
A representative of BDO is expected to be present at the Annual
Meeting, will not be making a statement but will be available to
respond to appropriate questions.
The Board of Directors unanimously recommends that the
stockholders vote FOR approval of Proposal 4.
BOARD OF DIRECTORS AND CERTAIN BOARD COMMITTEES
The Board of Directors held five (5) meetings during Fiscal
2006. During Fiscal 2006, each director attended at least 75% of
the meetings of the Board of Directors and each committee on
which such director served. All Board meetings and most
committee meetings include an executive session attended only by
the non-employee members of the Board.
Directors who are not employees of the Company receive
directors fees of $7,500 per annum, paid quarterly,
and an additional fee of $375 for each meeting of the Board of
Directors attended in person. The non-executive Chairman of the
Board also receives an annual fee of $60,000, paid quarterly.
Non-employee directors also may receive stock options under the
Director Plan. In October 2005, the non-employee directors were
each granted an option to purchase 7,000 shares of
Common Stock, under the Director Plan, at an exercise price of
$39.77 per share, the fair market value of the Common Stock
on the date of grant of the options. In addition, the Company
maintains directors and officers liability
insurance. Audit Committee members receive a fee of $1,500 for
each meeting of the Audit Committee attended in person or by
telephone. The Chairman of the Audit Committee also receives an
annual fee of $6,000, paid quarterly.
Stockholders can communicate with the Board of Directors or to
individual members of the Board by writing to the Companys
Secretary at: Black Box Corporation, 1000 Park Drive,
Lawrence, Pennsylvania 15055. The Board of Directors believes
that the annual meetings held by the Company are also
appropriate for stockholder communications with the Board. The
Board strongly encourages board member attendance at all
meetings, including annual meetings with stockholders. All
current directors attended the annual meeting of stockholders
held in August 2005.
5
The Board of Directors has four (4) standing committees:
the Audit Committee, the Compensation Committee, the Nominating
Committee and the Governance Committee.
Audit Committee
The Board has an Audit Committee, consisting of Mr. Richard
L. Crouch, as chair, Mr. Thomas W. Golonski and
Mr. Thomas G. Greig. Each member of the Audit Committee is
independent under Nasdaqs listing standards for audit
committee members.
The Audit Committees duties include the sole authority and
direct responsibility over the selection (subject to
stockholder ratification if the Committee so elects),
evaluation, retention and replacement of the Companys
independent registered public accounting firm. The Committee
also has responsibility for determining the compensation and
other terms of engagement of such independent auditors.
The Audit Committee has such other duties and responsibilities
as are set forth in its written charter, a copy of which is
attached to the Proxy Statement for Annual Meeting of
Stockholders held on August 10, 2004 (the 2004 Proxy
Statement) as Annex A. These duties and
responsibilities include pre-approval of all audit services and
permitted non-audit services, oversight of the independent
auditors, review of financial statements and Securities and
Exchange Commission (SEC) filings, review of the
lead audit partner, review of the auditors independence,
discussions with the auditors regarding the planning and scope
of the audit, discussions regarding the Companys internal
controls over financial reporting and the establishment of
procedures for the receipt, retention and treatment of
complaints regarding accounting, internal controls and auditing
and the confidentiality thereof. The Audit Committee may, from
time to time, delegate authority for pre-approval of audit
services and permitted non-audit services to the Audit Committee
chair.
The Audit Committee or Audit Committee chair pre-approved all
services performed by BDO during Fiscal 2006.
The Board of Directors has determined that all of the members of
the Audit Committee, Messrs. Crouch, Golonski and Greig,
qualify as audit committee financial experts within the meaning
of SEC regulations and that they have the requisite level of
financial sophistication required under Nasdaqs listing
standards. The Board of Directors also has determined that
Messrs. Crouch, Golonski and Greig are independent within
the meaning of Item 7(d)(3)(iv) of Schedule 14A of the
SECs proxy rules.
The Audit Committee met eight (8) times in Fiscal 2006.
Compensation Committee
The Board has a Compensation Committee, consisting of
Mr. Thomas W. Golonski, as chair, Mr. Richard L.
Crouch and Mr. Thomas G. Greig. The Compensation Committee
is responsible for reviewing and recommending to the Board of
Directors the total compensation of the executive officers of
the Company. The Committee also administers the Companys
stock option plans.
The Compensation Committee operates under a written charter
adopted by the Board of Directors, a copy of which is attached
to the 2004 Proxy Statement as Annex B.
The Compensation Committee met five (5) times in Fiscal
2006.
Nominating Committee
The Board has a Nominating Committee, consisting of Edward A.
Nicholson, Ph.D., as chair, Mr. William F. Andrews and
Mr. Thomas G. Greig. Each member of the Nominating
Committee is independent under Nasdaqs listing standards.
The duties of the Nominating Committee are to identify and
evaluate potential candidates for any Board vacancies, including
any individuals recommended by committee members, other Board
members, the Companys management or current stockholders
of the Company or identified by third-party executive search
firms, recommend to the Board individuals to be nominated for
election as directors by the stockholders at the Companys annual meeting and, from time to time, recommend
to the Board individuals to be elected by the Board to fill
Board vacancies.
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The Nominating Committee considers the independence, experience
relative to the business of the Company and the needs of the
Board, diversity and the ability to represent stockholders in
evaluating potential nominees. Potential Board members should
show a willingness to fully participate in Board meetings, a
proven track record of career accomplishments, the ability to
make sound judgments and leadership qualities.
It is the Nominating Committees policy to consider
stockholder proposals for nominees that are nominated in
accordance with the Certificate of Incorporation, By-laws and
other applicable laws, including the rules and regulations of
the SEC and any stock market on which the Companys stock
is listed for trading or quotation. Generally, such
recommendations made by a stockholder entitled to notice of, and
to vote at, the meeting at which such proposed nominee is to be
considered, are required to be written and received by the
Secretary of the Company within a prescribed time period prior
to the annual or special meeting. See Stockholder
Nominations and Proposals for a description of the
procedures to be followed in order to submit a recommendation
for a nominee.
The Nominating Committee operates under a written charter
adopted by the Board of Directors, a copy of which is attached
to the 2004 Proxy Statement as Annex C.
The Nominating Committee met three (3) times in Fiscal 2006.
Governance Committee
The Board has a Governance Committee, consisting of
Mr. William F. Andrews, as chair, Mr. Thomas W.
Golonski and Edward A. Nicholson, Ph.D. The Governance
Committee is responsible for reviewing, on an ongoing basis, the
corporate governance practices and principles established and
implemented by the Board and management for the Company,
monitoring trends and regulatory requirements in corporate
governance and recommending to the Board any changes in the
Companys corporate governance practices and functions
based upon such trends and regulatory requirements. The
Governance Committee performs an annual evaluation of the
objectives and performance of the members of the Board in
connection with its review of the compensation paid to Board
members.
The Governance Committee monitors the corporate governance
scoring for the Company as developed by Institutional
Shareholder Services (ISS), an independent service.
The ISS Corporate Governance Quotient score for the Company as
of June 2006 indicated that the Company outperformed 84% of the
companies in the technology hardware and equipment group and 69%
of the companies in the Standard & Poors 600
Index.
The Governance Committee operates under a written charter
adopted by the Board of Directors, a copy of which is attached
to the 2004 Proxy Statement as Annex D.
The Governance Committee met four (4) times in Fiscal 2006.
7
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table sets forth all cash compensation paid by the
Company and its subsidiaries, as well as other compensation paid
or accrued, to the Companys chief executive officer and to
the other executive officers of the Company at the end of Fiscal
2006 (each of whom received annual salary and bonus in Fiscal
2006 which exceeded $100,000) (the Named Executive
Officers) for each of the fiscal years ended
March 31, 2004, 2005 and 2006, respectively. Such
compensation was paid for services rendered in all capacities to
the Company and its subsidiaries:
SUMMARY COMPENSATION TABLE
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Long-Term | |
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Annual Compensation | |
Compensation | |
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Awards | |
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Securities | |
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All Other |
Name and Principal Position |
Year |
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Salary | |
Bonus | |
Options | |
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Compensation |
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($) |
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($) |
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(#) |
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($) |
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Fred C. Young
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2006 |
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474,994 |
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237,500 |
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110,000 |
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4,400 (1) |
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Chief Executive Officer
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2005 |
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474,994 |
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-0- |
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200,000 |
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3,775 (1) |
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2004 |
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|
|
474,994 |
|
|
|
100,000 |
|
|
100,000 |
|
|
|
4,240 (1) |
|
|
Roger E. M. Croft
|
|
2006 |
|
|
|
178,808 |
(2) |
|
|
-0- |
|
|
|
-0- |
|
|
|
69,440 (2)(3) |
|
|
Senior Vice President
|
|
2005 |
|
|
|
215,264 |
(2) |
|
|
-0- |
|
|
50,000 |
|
|
|
87,015 (2)(3) |
|
|
|
|
2004 |
|
|
|
215,264 |
(2) |
|
|
100,000 |
|
|
35,000 |
|
|
|
87,014 (2)(3) |
|
|
Michael McAndrew
|
|
2006 |
|
|
|
150,000 |
|
|
|
137,500 |
|
|
50,000 |
|
|
|
3,980 (1) |
|
|
Vice President, Chief Financial Officer, |
|
2005 |
|
|
|
125,000 |
|
|
|
-0- |
|
|
40,000 |
|
|
|
3,802 (1) |
|
|
Treasurer and Secretary |
|
2004 |
|
|
|
125,000 |
|
|
|
31,500 |
|
|
20,000 |
|
|
|
3,488 (1) |
|
|
Francis W. Wertheimber
|
|
2006 |
|
|
|
215,220 |
(2) |
|
|
69,777 |
(2) |
|
50,000 |
|
|
|
60,548 (2)(3) |
|
|
Senior Vice President
|
|
2005 |
|
|
|
215,220 |
(2) |
|
|
-0- |
|
|
50,000 |
|
|
|
60,548 (2)(3) |
|
|
|
|
|
2004 |
|
|
|
215,220 |
(2) |
|
|
100,000 |
|
|
35,000 |
|
|
|
59,598 (2)(3) |
|
|
|
(1) |
Represents amounts paid by the employer for the individual under
a 401(k) plan and payments for life insurance premiums. |
|
(2) |
Represents local currencies converted to U.S. dollars at
March 31, 2006 exchange rates. |
|
(3) |
Represents amounts paid by the employer for the individual under
a pension plan and for automobile expenses. |
Stock Option Plans
The Board of Directors and stockholders of the Company have
adopted the Employee Plan, and have authorized the issuance of
options and stock appreciation rights covering up to
9,200,000 shares of Common Stock under this plan (subject
to appropriate adjustments in the event of stock splits, stock
dividends and similar dilutive events). Options and stock
appreciation rights may be granted under the Employee Plan to
key salaried and hourly employees (including those who may also
be directors but who are not members of the Compensation
Committee) of the Company and its subsidiaries.
8
The Board of Directors and stockholders have also adopted the
Director Plan, and have authorized the issuance of options and
stock appreciation rights covering up to 250,000 shares of
Common Stock under this plan (subject to appropriate adjustments
in the event of stock splits, stock dividends and similar
dilutive events). Under the Director Plan, the Compensation
Committee may grant options and stock appreciation rights to
non-employee directors of the Company.
The following table sets forth information concerning the stock
options granted to each of the Companys Named Executive
Officers in Fiscal 2006:
OPTION GRANTS IN LAST FISCAL YEAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable Value at |
|
|
|
|
|
|
|
|
|
|
|
Assumed Annual Rates of Stock |
|
|
|
|
|
Price Appreciation For Option Term |
|
|
Individual Grants | |
|
(1) |
|
|
| |
|
| |
|
|
Number of | |
|
% of Total | |
|
|
|
|
|
|
Securities | |
|
Options | |
|
|
|
|
|
|
Underlying | |
|
Granted to | |
|
|
|
|
|
|
Options | |
|
Employees in | |
|
Exercise or | |
|
Expiration | |
|
|
Name |
|
Granted | |
|
Fiscal Year | |
|
Base Price | |
|
Date | |
|
5% | |
|
10% | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(#) | |
(%) | |
|
($/Share) | |
|
|
|
($) | |
|
($) | |
|
Fred C. Young
|
|
|
110,000 |
|
|
|
8.8% |
|
|
39.77 |
|
|
|
10/31/15 |
|
|
2,751,225 |
(2) |
|
|
6,972,145 |
(3) |
|
|
Roger E. M. Croft
|
|
|
-0- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael McAndrew
|
|
|
50,000 |
|
|
|
4.0% |
|
|
39.77 |
|
|
|
10/31/15 |
|
|
1,250,557 |
(2) |
|
|
3,169,157 |
(3) |
|
|
Francis W. Wertheimber
|
|
|
50,000 |
|
|
|
4.0% |
|
|
39.77 |
|
|
|
10/31/15 |
|
|
1,250,557 |
(2) |
|
|
3,169,157 |
(3) |
|
|
All Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
440,036,056 |
(4) |
|
|
1,115,137,761 |
(4) |
|
|
|
(1) |
Assumes, from the date of grant of the option through its
10 year expiration date, a hypothetical 5% and 10% per
year appreciation (compounded annually) in the fair market value
of the Common Stock. The 5% and 10% rates of appreciation are
set by the SEC and, therefore, are not intended to forecast
possible future appreciation, if any, in the Common Stock. If
the Common Stock does not increase in value from the date of
grant of the stock option, such option would be valueless. |
|
(2) |
Assuming the exercise price of $39.77 per share appreciates
at 5% per annum, the fair market value of the Common Stock
after 10 years is $64.78 per share. |
|
(3) |
Assuming the exercise price of $39.77 per share appreciates
at 10% per annum, the fair market value of the Common Stock
after 10 years is $103.15 per share. |
|
(4) |
Represents assumed appreciation in market value of 5% per
annum and 10% per annum, respectively, of shares of Common
Stock outstanding as of March 31, 2006 over a term of
10 years, measured from such date and assuming an average
purchase price of $39.77 per share. |
9
The following table sets forth information with respect to each
of the Companys Named Executive Officers concerning the
exercise of options during Fiscal 2006 and unexercised options
held as of March 31, 2006:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of | |
|
|
|
|
|
|
|
Securities | |
Value of | |
|
|
|
|
|
|
Underlying | |
Unexercised | |
|
|
|
|
|
|
Unexercised | |
In-the-Money | |
|
|
Shares Acquired | |
Net Value | |
Options at | |
Options at | |
Name |
|
on Exercise | |
Realized | |
Fiscal Year End | |
Fiscal Year End (1) | |
|
|
| |
| |
| |
| |
|
|
(#) | |
|
($) | |
(# Exercisable/ | |
|
($ Exercisable/ | |
|
|
|
|
|
|
# Unexercisable) | |
$ Unexercisable) | |
|
Fred C. Young
|
|
|
76,000 |
|
|
|
2,038,320 |
|
|
|
1,432,068/ 133,334 |
|
|
16,508,088/ 1,771,342 |
|
Roger E. M. Croft
|
|
|
105,000 |
|
|
|
1,280,862 |
|
|
|
121,817/ 33,334 |
|
|
568,501/ 458,676 |
|
Michael McAndrew
|
|
|
-0- |
|
|
|
-0- |
|
|
|
144,385/ 26,667 |
|
|
1,478,120/ 366,938 |
|
Francis W. Wertheimber
|
|
|
-0- |
|
|
|
-0- |
|
|
|
203,438/ 33,334 |
|
|
1,379,489/ 458,676 |
|
|
(1) |
This Value of Unexercised
In-the-Money Options
represents the difference between the March 31, 2006
closing stock price of $48.05 and the option cost for all
exercisable and unexercisable options. |
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS
Membership and Role of Compensation Committee
The Compensation Committee of the Board of Directors consists of
Mr. Thomas W. Golonski, as chair, Mr. Richard L.
Crouch and Mr. Thomas G. Greig. The Compensation Committee
operates under a written charter adopted by the Board of
Directors. The Compensation Committee is charged with
administering the Companys compensation programs for
executive officers, consisting of fixed compensation and
incentive compensation plans, including the Companys stock
option plans. The Company believes that its total executive
compensation package should be designed to facilitate the
achievement of short- and long-range Company goals, to recognize
individual executive performance and contribution and to promote
increased value creation for the Companys stockholders. To
this end, the Company and the Compensation Committee seek to:
|
|
|
|
|
Hire, train, develop, compensate and retain the highest quality
executives possible for the Companys success. |
|
|
|
Reward executives for outstanding contributions to the
achievement of the Companys goals and overall success. |
|
|
|
Provide incentives for executives to align their goals with
those of the stockholders through a pay-for-performance
philosophy in the form of fixed and at-risk, variable
compensation. |
Annual Executive Compensation
The annual compensation for executives is paid based upon
performance, experience, the requirements of the position and
the executives relative ability to impact the
Companys overall success. The Company and the Compensation
Committee believe that the annual compensation paid to the
Companys executives has historically been competitive with
that paid to executives in the industry. In making compensation
decisions, the Company has relied upon its Board of Directors
and the Compensation Committees collective knowledge of
the industry and the functions that Company executives perform.
The primary goals for executives, in their own respective
positions, are to help the Company achieve its annual profit and
cash flow targets. Fixed salaries for the executives are
reviewed by the Compensation Committee on an annual basis and
may be increased or decreased based upon the Compensation
Committees decision that they are competitive in the industry, and/or that
a particular executives contributions to the Company have
been significant during the year. In making its decision, the
Compensation Committee will also consider the amount of each
executives overall compensation, which is in the form of
base salary versus compensation that is at-risk.
10
Included in total compensation is at-risk incentive
compensation. Generally, the incentive compensation payments are
made as a percentage of fixed salaries. Any payments are subject
to approval by the Board of Directors.
Employment Agreements
The Company entered into an agreement with Fred C. Young in May
2004 and into agreements with Roger E. M. Croft and Francis W.
Wertheimber in November 2004. The agreements generally provide
for certain benefits to these executive officers in the event
that their employment is terminated within two (2) years
(three (3) years in the case of Mr. Young) of a change
of control either by (a) the Company for other than cause,
death, disability or retirement or (b) the officers
resignation for good reason. A change of control is deemed to
occur if it is reportable as such by SEC rules or if 20% or more
of the Companys capital stock is acquired, or 51% or more
of its capital stock is issued in a merger or substantially all
assets are sold. Mr. Young also is entitled to receive the
benefits upon termination by him of his employment for any
reason during a 30-day
period commencing six (6) months after a change in control.
Additionally, Mr. Young will receive the benefits if
(a) he is terminated by the Company for other than cause,
death, disability or retirement or (b) upon his resignation
if the Board of Directors removes or fails to reelect him to the
chief executive officer position or otherwise reduces the power
and status of such position at any time other than at a time
when he could have been terminated for cause.
The agreements define cause as the officers deliberate and
intentional failure to devote his or her best efforts to the
performance of duties, conviction of criminal fraud or a felony
involving moral turpitude, gross misconduct materially and
demonstrably damaging to the Company, continuing failure after
notice to adhere to the nondisclosure and noncompete portions of
the agreement and willful failure to follow instructions of the
Board. Good reason is defined as the failure of the Company to
have any successor assume the agreement and the occurrence of
any of the following after a change in control: the assignment
of new duties materially and substantially inconsistent with
prior duties and/or a material change in reporting
responsibilities, reduction in base salary, failure to continue
comparable incentive compensation, failure to continue
comparable stock option and other fringe benefits, relocation
beyond 50 miles and any purported termination other than
for disability or retirement or made without a specified written
notice of termination.
The benefits provided by the agreements generally equal two
(2) years (three (3) years in the case of
Mr. Young) of annual base salary, annualized long-term
incentive plan payments, other cash bonuses and medical
insurance or similar benefit plans (Benefits). In
addition, all of an executives unvested options shall vest
and remain outstanding for their stated term if such executive
is entitled to the Benefits upon his or her termination as
discussed above. Further, all of Mr. Youngs unvested
options shall vest and remain outstanding for their stated term
(a) in the event of his death or (b) if he terminates
his employment after May 11, 2007 at any time other than at
a time when he could have been terminated for cause.
The original term of each of the agreements is five
(5) years with an evergreen renewal on a one-year basis
thereafter absent notice of nonrenewal six (6) months prior
to the renewal date.
Company Stock Option Plan
In the fiscal year ended March 31, 1993, the Board of
Directors and stockholders approved the Employee Plan, pursuant
to which the Compensation Committee may grant stock options or
stock appreciation rights to key employees, including those who
may be executive officers of the Company. This plan was amended
in the fiscal years ended March 31, 1995 through 2006
pursuant to stockholder votes to increase the number of shares
available for the grant of options thereunder. Information with
respect to the options granted to the Named Executive Officers
in Fiscal 2006 is set forth in the table entitled Option
Grants in Last Fiscal Year
11
appearing elsewhere in this Proxy Statement. The Compensation
Committee believes that the options granted are consistent with
the Companys overall compensation policies and the
individual compensation packages of each Named Executive Officer.
The Employee Plan requires that all options have an exercise
price of not less than the fair market value of the stock on the
date of grant of the option.
Chief Executive Officers Compensation Analysis
In determining the total compensation for Fred C. Young, Chief
Executive Officer of the Company, the Compensation Committee
used the same criteria described above in the opening paragraphs
of the Annual Executive Compensation section.
The Compensation Committee believes that the total compensation
for Mr. Young was appropriate for Fiscal 2006 because of
the overall performance of the Company, his individual
performance and comparable executive compensation in the
industry.
Summary
The Companys total compensation plan is predicated on the
Compensation Committees and the Companys belief that
executives contribute to stockholder returns by maximizing
profits and cash flow.
The Compensation Committee believes that the total compensation
paid to its executives for Fiscal 2006 was reasonable in view of
the Companys performance relative to the overall industry.
|
|
|
Compensation Committee: |
|
|
Richard L. Crouch |
|
Thomas W. Golonski |
|
Thomas G. Greig |
12
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following is the report of the Audit Committee with respect
to the Companys audited financial statements for Fiscal
2006 included in the Companys Annual Report on
Form 10-K. The
information contained in this 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, as
amended, or the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically incorporates
it by reference in such filing.
Membership and Role of Audit Committee
The Audit Committee of the Board of Directors consists of
Mr. Richard L. Crouch, as chair,
Mr. Thomas W. Golonski and Mr. Thomas G.
Greig. Each of the members of the Audit Committee is independent
as defined under Nasdaqs listing standards. The Audit
Committee operates under a written charter adopted by the Board
of Directors.
Review with Management
The Audit Committee has reviewed and discussed the
Companys audited financial statements with management.
Review and Discussions with Independent Registered Public
Accounting Firm
The Audit Committee has discussed with BDO, the Companys
independent registered public accounting firm for Fiscal 2006,
the matters required to be discussed by SAS 61, as amended
(Codification of Statements on Accounting Standards), which
includes, among other items, matters related to the conduct of
the audit of the Companys financial statements.
The Audit Committee has also received written disclosures and
the letter from BDO required by Independence Standards Board
Standard No. 1 (which relates to the accountants
independence from the Company and its related entities) and has
discussed with BDO their independence from the Company.
Conclusion
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the
Companys audited financial statements be included in the
Companys Annual Report on
Form 10-K for
Fiscal 2006.
|
|
|
Audit Committee: |
|
|
Richard L. Crouch |
|
Thomas W. Golonski |
|
Thomas G. Greig |
13
CHANGES IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
On August 6, 2004, Ernst and Young LLP
(E&Y) informed the Company that it would resign
as the independent registered public accounting firm for the
Company upon completion of its review of the interim financial
information for the Companys second fiscal quarter ended
October 2, 2004 and the filing of the Companys
Quarterly Report on
Form 10-Q for such
period. The Audit Committee was not required to take any action
regarding the resignation.
The reports of E&Y on the Companys financial
statements for the fiscal years ended March 31, 2003 and
2004, the two most recent fiscal years prior to E&Ys
resignation, did not contain an adverse opinion or a disclaimer
of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles. During the fiscal years
ended March 31, 2003 and 2004 and through the effective
date of E&Ys resignation, there were no disagreements
with E&Y on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the
satisfaction of E&Y, would have caused them to make
reference thereto in their report on the financial statements
for such years. During the fiscal years ended March 31,
2003 and 2004 and through the effective date of E&Ys
resignation, there were no reportable events except as discussed
below.
The Company engaged BDO as its independent registered public
accounting firm effective as of October 28, 2004. During
the two fiscal years ended March 31, 2004 and
March 31, 2003, and through October 28, 2004, the
Company had not consulted with BDO regarding either:
(i) the application of accounting principles to a specified
transaction, either completed or proposed; or the type of audit
opinion that might be rendered on the Companys financial
statements; or (ii) any matter that was either the subject
of disagreement or a reportable event. The selection of BDO as
the Companys independent auditors was made by the Audit
Committee.
As previously disclosed in the Companys Annual Report on
Form 10-K for the
fiscal year ended March 31, 2004 (the 2004
Form 10-K),
in connection with its fiscal year end audit procedures, E&Y
reported to management and to the Audit Committee that the
combination of identified reportable conditions under standards
established by the American Institute of Certified Public
Accountants, internal control deficiencies at the Company
relating primarily to the internal control environment, the risk
assessment process, the monitoring process that assesses the
quality of the Companys internal control performance and
year-end audit adjustments collectively constituted a material
weakness in the Companys internal control over financial
reporting. E&Y advised the Company, however, that none of
these conditions or concerns individually constituted a material
weakness.
Under Section 404 of the Sarbanes-Oxley Act of 2002,
management of the Company was required to report on the
Companys internal control over financial reporting in the
Companys Annual Reports on
Form 10-K for the
fiscal year ended March 31, 2005 (Fiscal 2005)
and the fiscal year ended March 31, 2006, which were filed
with the SEC on June 14, 2005 (the 2005
Form 10-K)
and June 14, 2006 (the 2006
Form 10-K),
respectively, and BDO was required to assess managements
reports. In the 2005
Form 10-K and the
2006 Form 10-K,
Company management concluded that the Companys internal
control over financial reporting was effective at the reasonable
assurance level as of March 31, 2005 and March 31,
2006, respectively, subject in each case to certain permitted
exceptions for newly-acquired companies. BDO, in its report
dated May 25, 2005 included in the 2005
Form 10-K and in
its report dated May 26, 2006 included in the 2006
Form 10-K, stated
that managements assessment that the Company maintained
effective internal control over financial reporting as of
March 31, 2005 and March 31, 2006 were fairly stated,
in all material respects, based on applicable criteria. The
Company refers the reader to the 2006
Form 10-K, 2005
Form 10-K and 2004
Form 10-K for a
complete discussion of these matters.
14
PERFORMANCE GRAPH
The graph below represents and compares the value, through
March 31, 2006, of a hypothetical investment of $100 made
on March 31, 2001, in each of (i) the Common Stock,
(ii) a peer group of companies determined by the Company
(the Peer Group), (iii) the Nasdaq Stock Market
(U.S.), (iv) the Russell 2000 and (v) the S&P
Small Cap 600, assuming the reinvestment of dividends in each
case. The Peer Group consists of CDW Corporation, Cisco Systems,
Inc., Avaya Inc., Nortel Networks Corporation, International
Business Machines Corporation and Electronic Data Systems
Corporation. The Peer Group was added to the performance graph
because the Company believes that, given its current mix of
revenues generated from network infrastructure
on-site services and
products, the performance of this Peer Group is a relevant
metric.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2001 | |
3/31/2002 | |
3/31/2003 | |
3/31/2004 | |
3/31/2005 | |
3/31/2006 | |
|
|
| |
| |
| |
| |
| |
| |
|
Black Box Corporation
|
|
|
$100.00 |
|
|
|
$108.66 |
|
|
|
$66.67 |
|
|
|
$120.80 |
|
|
|
$ 85.04 |
|
|
|
$109.85 |
|
|
Peer Group
|
|
|
$100.00 |
|
|
|
$ 95.30 |
|
|
|
$59.96 |
|
|
|
$111.25 |
|
|
|
$ 90.89 |
|
|
|
$ 96.83 |
|
|
Nasdaq Stock Market (U.S.)
|
|
|
$100.00 |
|
|
|
$103.39 |
|
|
|
$77.21 |
|
|
|
$113.36 |
|
|
|
$113.86 |
|
|
|
$135.02 |
|
|
Russell 2000
|
|
|
$100.00 |
|
|
|
$113.98 |
|
|
|
$83.25 |
|
|
|
$136.39 |
|
|
|
$143.77 |
|
|
|
$180.93 |
|
|
S&P Small Cap 600
|
|
|
$100.00 |
|
|
|
$121.97 |
|
|
|
$91.71 |
|
|
|
$143.51 |
|
|
|
$162.28 |
|
|
|
$201.34 |
|
15
EQUITY PLAN COMPENSATION INFORMATION
The following table sets forth information about the
Companys equity compensation plans as of March 31,
2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
(b) |
|
(c) |
|
|
|
|
|
|
Number of Securities |
|
|
|
|
|
|
Remaining Available for |
|
|
Number of Securities to Be |
|
Weighted-Average |
|
Future Issuance Under Equity |
|
|
Issued Upon Exercise of |
|
Exercise Price of |
|
Compensation Plans |
|
|
Outstanding Options, |
|
Outstanding Options, |
|
(Excluding Securities |
Plans |
|
Warrants and Rights |
|
Warrants and Rights |
|
Reflected in Column (a)) |
|
|
|
|
|
|
|
|
Equity compensation plans approved by security holders
|
|
|
5,051,544 |
(1) |
|
|
$38.28 |
|
|
|
65,150 |
|
|
Equity compensation plans not approved by security holders
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,051,544 |
|
|
|
$38.28 |
|
|
|
65,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes both vested and unvested options. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information publicly available to
the Company, as of March 31, 2006, regarding the beneficial
ownership of the Common Stock by all stockholders, other than
Fred C. Young (whose information is disclosed in the
Security Ownership of Management table set forth below), known
by the Company to be beneficial owners of more than five percent
(5%) of its outstanding Common Stock:
|
|
|
|
|
|
|
|
|
|
Number of |
|
Percent of |
|
|
Shares |
|
Shares (5) |
|
|
|
|
|
|
FMR Corp. (1)
|
|
2,546,525 |
|
|
14.5% |
|
|
82 Devonshire Street, Boston, MA 02109
|
|
|
|
|
|
|
|
Dimensional Fund Advisors Inc. (2)
|
|
1,333,388 |
|
|
7.6% |
|
|
1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401
|
|
|
|
|
|
|
|
AXA (3)
|
|
986,887 |
|
|
5.6% |
|
|
26, Rue Drouot, 75009 Paris, France
|
|
|
|
|
|
|
|
LSV Asset Management (4)
|
|
892,802 |
|
|
5.1% |
|
|
1 N. Wacker Drive, Suite 400, Chicago, IL 60606
|
|
|
|
|
|
|
|
|
(1) |
Includes 2,276,925 shares beneficially owned by Fidelity
Management & Research Company (Fidelity), a
wholly-owned subsidiary of FMR Corp. and a registered investment
adviser, of which 1,981,025 shares are owned by one
investment company, Fidelity Low Priced Stock Fund.
Edward C. Johnson 3d, FMR Corp. and the funds each has
sole power to dispose of the 2,276,925 shares owned by the
funds. Neither FMR Corp. nor Edward C. Johnson 3d,
Chairman of FMR Corp., has the sole power to vote or direct the
voting of the shares owned directly by the funds, which power
resides with the funds Boards of Trustees. Fidelity
carries out the voting of the shares under written guidelines
established by the funds Boards of Trustees. Also includes
269,600 shares beneficially owned by Fidelity Management
Trust Company, a wholly-owned bank subsidiary of FMR Corp.,
serving as investment manager of certain institutional accounts.
Edward C. Johnson 3d and FMR Corp. each has sole power
to dispose of the 269,600 shares owned by the institutional
accounts and sole power to vote or direct the voting of these
shares. This information is derived from FMR Corp.s
Schedule 13G filed on February 14, 2006. |
|
(2) |
Dimensional Fund Advisors Inc. (Dimensional) is
a registered investment advisor that furnishes investment advice
to four registered investment companies and serves as manager to
certain other commingled group trusts and separate accounts.
This information is derived from Dimensionals
Schedule 13G filed on February 6, 2006. |
16
|
|
(3) |
Includes 725,179 shares beneficially owned by AXA Rosenberg
Investment Management LLC, of which it has sole voting power
with respect to 306,320 shares and sole dispositive power
with respect to 725,179 shares. Includes
260,308 shares beneficially owned by Alliance Capital
Management, L.P., of which it has sole voting power with respect
to 207,983 shares, shared voting power with respect to
2,025 shares and sole dispositive power with respect to
260,308 shares. Also includes 1,400 shares
beneficially owned by AXA Equitable Life Insurance Company, of
which it has sole dispositive power. AXA and its controlling
entities, AXA Assurances Vie Mutuelle, AXA Courtage Assurance
Mutuelle and AXA Assurances I.A.R.D. Mutuelle, are members of a
group which is deemed to beneficially own the shares reported.
This information is derived from AXAs Schedule 13G
filed on February 14, 2006. |
|
(4) |
LSV Asset Management (LSV) is a registered
investment adviser and beneficially owns 892,802 shares, of
which it has sole voting power with respect to
595,997 shares and sole dispositive power with respect to
892,802 shares. This information is derived from LSVs
Schedule 13G filed on February 10, 2006. |
|
(5) |
Based on 17,593,603 shares outstanding as of March 31,
2006. |
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information available to
the Company, as of March 31, 2006, regarding the shares of
the Common Stock beneficially owned by (i) each of the
Companys directors; (ii) each of the Companys
Named Executive Officers; and (iii) all directors and
executive officers of the Company as a group:
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Percent of |
|
|
Shares |
|
Shares (4) |
|
|
|
|
|
|
William F. Andrews (1)
|
|
|
63,002 |
|
|
|
* |
|
|
Roger E. M. Croft (2)
|
|
|
121,818 |
|
|
|
* |
|
|
Richard L. Crouch (1)
|
|
|
9,300 |
|
|
|
* |
|
|
Thomas W. Golonski (1)
|
|
|
20,500 |
|
|
|
* |
|
|
Thomas G. Greig (1)
|
|
|
41,003 |
|
|
|
* |
|
|
Michael McAndrew (2)
|
|
|
144,386 |
|
|
|
* |
|
|
Edward A. Nicholson, Ph.D. (1)
|
|
|
9,000 |
|
|
|
* |
|
|
Francis W. Wertheimber (2)
|
|
|
203,439 |
|
|
|
1.1% |
|
|
Fred C. Young (2)
|
|
|
1,545,420 |
|
|
|
8.1% |
|
|
|
|
|
|
|
|
|
|
|
All directors and executive officers listed above, as a group of
nine persons (3)
|
|
|
2,157,868 |
|
|
|
11.0% |
|
|
|
(1) |
Includes for Mr. Andrews, Mr. Crouch,
Mr. Golonski, Mr. Greig and Dr. Nicholson:
53,002, 9,000, 20,000, 35,002 and 9,000 shares,
respectively, pursuant to rights to acquire such shares as a
result of vested options, as of May 30, 2006, granted under
the Director Plan. |
|
(2) |
Includes for Mr. Croft, Mr. McAndrew,
Mr. Wertheimber and Mr. Young: 121,817, 144,385,
203,438 and 1,432,068 shares, respectively, pursuant to
rights to acquire such shares as a result of vested options, as
of May 30, 2006, granted under the Employee Plan. For
Mr. Young, includes 1,611 shares held by his children
or in trust for his children. |
|
(3) |
Includes for all directors and named executive officers as a
group 2,027,712 shares pursuant to rights to acquire such
shares as a result of vested options granted under the Employee
Plan and the Director Plan. |
|
(4) |
Based on 17,593,603 shares outstanding as of March 31,
2006. |
The difference between the amounts set
forth in the above table and the amounts indicated in the
footnotes are shares owned outright either directly or
indirectly.
* Represents less than 1% of
the Common Stock outstanding.
17
SUMMARY OF 1992 STOCK OPTION PLAN
The following is a summary description of the Employee Plan, is
not a complete statement of the Employee Plan and is qualified
in its entirety by reference to the complete text of the
Employee Plan, a copy of which is available from the Company
upon request.
Administration. The Employee Plan is administered
by a committee consisting of at least two (2) non-employee
directors of the Company who are appointed by and serve at the
pleasure of the Board of Directors (the Committee).
The Committee, from time to time at its discretion, makes
determinations with respect to the persons who shall be granted
options (Options) or stock appreciation rights
(Rights), the number of shares of the Common Stock
that may be purchased pursuant to such Options or Rights and the
designation of Options as Incentive Stock Options or
Non-Qualified Stock Options, as defined below. The
interpretation and construction by the Committee of any
provisions of the Employee Plan or of an Option or Right granted
thereunder is binding and conclusive on all optionees and on
their legal representatives and beneficiaries. The Committee
shall not have the authority to reprice outstanding Options or
Rights without stockholder approval.
Types of Options. The Committee, in its
discretion, may grant Options to purchase shares of Common Stock
either in the form of incentive stock options (Incentive
Stock Options) qualified as such under the Internal
Revenue Code of 1986, as amended (the Code), or
other options (Non-Qualified Stock Options), as
designated in the optionees stock option agreement.
Historically, the Company has only granted Non-Qualified Stock
Options.
Rights. The Committee, in its discretion, may
grant Rights either alone, simultaneously with the grant of an
Incentive Stock Option or Non-Qualified Stock Option and in
conjunction therewith, or subsequent to the grant of a
Non-Qualified Stock Option and in conjunction therewith or in
the alternative thereto.
Eligibility. Any key salaried or hourly employee
who is not a member of the Committee may be granted Incentive
Stock Options, Non-Qualified Stock Options or Rights under the
Employee Plan until November 30, 2012.
Exercise Price. The Committee shall determine the
exercise price for each Option or Right granted under the
Employee Plan; provided, however, that the exercise price:
(i) in the case of an Incentive Stock Option granted to an
employee, other than an employee who owns more than 10% of the
total combined voting power of all classes of outstanding stock
of the Company (a Ten-Percent Stockholder), or in
the case of a Non-Qualified Stock Option, shall not be less than
the fair market value of the shares to which the Option relates
on the date of grant; (ii) in the case of an Incentive
Stock Option granted to an employee who is a Ten-Percent
Stockholder, shall not be less than 110% of the fair market
value of the shares to which the Option relates on the date of
grant; and (iii) in the case of a Right granted alone,
shall not be less than 100% of the fair market value of the
shares to which the Right relates. On June 22, 2006, the
closing price of the Common Stock on Nasdaq was $38.45.
Exercise Period and Exercise of Options or Rights.
An Option or Right may be exercised in whole at any time, or in
part from time to time, within such period or periods as may be
determined by the Committee and set forth in the grantees
agreement, provided that: (i) no Incentive Stock Option
shall be exercisable after the expiration of ten (10) years
from the date of grant; and (ii) no Incentive Stock Option
granted to an employee who is a Ten-Percent Stockholder shall be
exercisable after the expiration of five (5) years from its
date of grant. Options are not transferable by the optionee
except by will or by the laws of descent and distribution.
Termination of Employment; Disability; Death. Upon
termination of employment, an Option or Right previously granted
to an employee, unless otherwise specified by the Committee and
to the extent not previously exercised, shall terminate and
become null and void, provided that: (i) if the employee
shall die (a) while in the employ of the Company or
(b) within three (3) months of retirement from such
employment or (c) within one (1) year of retirement
from employment by reason of disability, the legal
representative or heirs of such employee shall be entitled to
exercise such Option or Right (to the extent otherwise
exercisable) for a one-year period following the date of death;
and (ii) if the employment shall have been terminated by reason of retirement, disability or termination other than for
cause (as defined in the Employee Plan), then such employee
shall be entitled to exercise such Option or Right (to the
extent otherwise exercisable) at any time up to (a) three
(3) months after termination by reason of retirement or
other than for cause and (b) one (1) year after
termination by reason of disability. If an employee voluntarily
terminates his or her employment or is terminated for cause, any
Option or Right, unless otherwise specified by the Committee,
shall immediately terminate.
18
Payment. The exercise price of shares purchased
pursuant to an Option shall be paid in full at the time of any
exercise either in cash or by certified check; provided,
however, to the extent that the terms of such Option provide,
the purchase price may be paid for, in whole or in part, by
delivering previously-owned shares of Common Stock or, in part,
by promissory note (for not more than 80% of such purchase price
subject to applicable margin requirements).
Limitation on Annual Awards. The aggregate fair
market value of stock for which Incentive Stock Options are
exercisable for the first time by an optionee during any
calendar year under the terms of the Employee Plan shall not
exceed the sum of $100,000. No person may receive Options or
Rights under the Employee Plan for more than 500,000 shares
in any given fiscal year.
Adjustments, Amendment or Discontinuance. In the
event of any change in the outstanding Common Stock through
merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares or other like change
in capital structure of the Company, the Committee shall make
such adjustment to each outstanding Option and Right that it, in
its sole discretion, deems appropriate. In addition, in the
event of any such change, the Committee shall make any further
adjustment as may be appropriate to the maximum number of shares
which may be acquired under the Employee Plan pursuant to the
exercise of Options and Rights, the maximum number of shares
which may be so acquired by one (1) employee and the number
of shares and prices per share subject to outstanding Options
and Rights as shall be equitable to prevent dilution or
enlargement of rights under such Options or Rights, and the
determination of the Committee as to these matters shall be
conclusive.
In the event of a change in control of the Company,
as defined in the Employee Plan, all then outstanding Options
and Rights shall immediately become exercisable. The Committee,
in its discretion, may determine that, upon the occurrence of a
change in control transaction, each Option or Right outstanding
under the Employee Plan shall terminate within a specified
number of days after notice to the holder, and such holder shall
receive, with respect to each share subject to such Option or
Right, cash in an amount equal to the excess of the fair market
value of such share immediately prior to such transaction over
the exercise price per share of such Option or Right.
The Board of Directors or the Committee, as the case may be,
may, from time to time, amend the Employee Plan, or any
outstanding Option or Right consistent with the terms of the
Employee Plan, provided that no amendment shall be made, without
the approval of the stockholders of the Company, that will
(i) increase the total number of shares reserved for
Options under the Employee Plan (other than an increase
resulting from an adjustment of outstanding Common Stock),
(ii) reduce the exercise price of any Incentive Stock
Option granted under the Employee Plan below the price required
by the Employee Plan, (iii) modify the provisions of the
Employee Plan relating to eligibility or (iv) materially
increase the benefits accruing to participants under the
Employee Plan. In addition, the rights and obligations under any
Option or Right granted before amendment of the Employee Plan or
any unexercised portion of such Option or Right shall not be
adversely affected by amendment of the Employee Plan, Option or
Right without the consent of the holder of such Option or Right.
The Board of Directors may at any time suspend or terminate the
Employee Plan.
Term of Plan. Options and Rights may be granted
under the Employee Plan until November 30, 2012.
Federal Income Tax Consequences
The following is a brief summary of the principal United States
federal income tax consequences of the grant and exercise of
Options or Rights under the Employee Plan, and is based upon an
interpretation of present federal tax laws and regulations and
may be inapplicable if such laws and regulations are changed.
19
This summary is not intended to be exhaustive and, among other
items, does not describe state, local or foreign tax
consequences. Each employee receiving a grant of Options or
Rights should consult with his or her personal tax advisor
regarding the federal, state, local or foreign tax consequences
of participating in the Employee Plan. To the extent awards
under the Employee Plan are subject to Section 409A of the
Code, the following description assumes that such awards will be
designed to conform to the requirements of Code
Section 409A and the regulations promulgated thereunder (or
an exception thereto). The Employee Plan is not subject to the
protective provisions of the Employee Retirement Income Security
Act of 1974 and is not qualified under Section 401(a) of
the Code.
Non-Qualified Stock Options and Stock Appreciation
Rights. Non-Qualified Stock Options granted under the
Employee Plan are not included in the optionees income at
the time of grant. Rather, the optionee realizes compensation
income only when the Non-Qualified Stock Option is exercised.
The amount of income realized is equal to the excess of the fair
market value of the shares received as of the date of exercise
over the sum of the exercise price plus the amount, if any, paid
by the optionee for the Non-Qualified Stock Option.
If a Non-Qualified Stock Option is exercised solely through
payment of the exercise price by the delivery of Common Stock,
to the extent that the number of shares received by the optionee
exceeds the number of shares surrendered, ordinary income will
be realized by the optionee at that time in an amount equal to
the fair market value of such excess shares. The tax basis of
any such excess shares will be equal to the income recognized by
the employee.
Generally, the optionees basis in the shares will be the
exercise price plus the compensation income realized at the time
of exercise and the amount, if any, paid by the optionee for the
Non-Qualified Stock Option. Upon the sale of any such shares,
the capital gain or loss will be short-term if the shares are
disposed of within one (1) year after the option is
exercised; such short-term gains are taxable as ordinary income.
If the shares were held more than twelve (12) months as of
the sale date, the gain is taxable as a long-term capital gain
at a maximum rate of 15%.
If a Non-Qualified Stock Option expires without being exercised,
the optionee will have no tax consequences unless the optionee
paid for the Non-Qualified Stock Option. In such case, the
optionee will recognize a loss in the amount of the price paid
by the optionee for the Non-Qualified Stock Option.
The Company is generally entitled to a tax deduction in an
amount equal to the compensation income recognized by the
optionee. This deduction is allowed in the Companys
taxable year in which the income is included as compensation to
the optionee.
If the option exercise price is paid by an optionee in part by
promissory note, the interest paid by the optionee under the
promissory note is investment indebtedness which is generally
deductible by the optionee as an itemized deduction from gross
income to the extent the optionee has net investment income;
interest that is disallowed because of this limitation may be
carried over to succeeding tax years and is deductible in the
carryover year, subject to the net investment income limitation.
Rights are treated very similarly to Non-Qualified Stock Options
for tax purposes. The holder of a Right will not normally
realize any taxable income upon the grant of a Right. Upon the
exercise of a Right, the person exercising the Right will
realize ordinary income equal to either: (i) the cash
received upon the exercise of the Right; or (ii) if shares
are received upon the exercise of the Right, the fair market
value of such shares as of the exercise date. The basis of any
shares acquired upon exercise of a Right will be their fair
market value on the date of exercise, and the holding period
will commence at that time. The Company will be entitled to a
tax deduction for compensation paid in the same amount that the
holder of the Right realizes as ordinary income.
Incentive Stock Options. Options issued under the
Employee Plan and designated as Incentive Stock Options are
intended to qualify under Section 422 of the Code. Under
the provisions of Section 422 and the related regulations,
an optionee will not be required to recognize any income for
federal income tax purposes at the time of grant of an Incentive
Stock Option, nor is the Company entitled to any deduction. The
exercise of an Incentive Stock Option is also not a taxable
event, although the difference between the option price and the
fair market value on the date of exercise is an item of tax
preference for purposes of the alternative minimum tax.
20
The taxation of gain or loss upon the sale of stock
acquired upon exercise of an Incentive Stock Option depends, in
part, on whether the stock is held for at least two
(2) years from the date the option was granted and at least
one (1) year from after the date the stock was transferred
to the optionee (the ISO Holding Period).
If the ISO Holding Period is not met, then, upon disposition of
such shares (a disqualifying disposition), the
optionee will realize compensation, taxable as ordinary income,
in an amount equal to the excess of the fair market value of the
shares at the time of exercise over the option price limited,
however, to the gain on sale. Any additional gain would be
taxable as capital gain (see below). If the optionee disposes of
the shares in a disqualifying disposition at a price that is
below the fair market value of the shares at the time the
Incentive Stock Option was exercised and such disposition is a
sale or exchange to an unrelated party, the amount includable as
compensation income to the optionee will be limited to the
excess of the amount received on the sale or exchange over the
exercise price.
If the optionee recognizes ordinary income upon a disqualifying
disposition, the Company generally will be entitled to a tax
deduction in the same amount.
If the ISO Holding Period is met, any gain recognized upon a
sale is taxable as a long-term capital gain at a maximum rate of
15%.
If the Incentive Stock Option is exercised by delivery of
previously owned shares of Common Stock in partial or full
payment of the option price, no gain or loss will ordinarily be
recognized by the optionee on the transfer of such previously
owned shares. However, if the previously owned transferred
shares were acquired through the exercise of an Incentive Stock
Option, the optionee may realize ordinary income with respect to
the shares used to exercise an Incentive Stock Option if such
transferred shares have not been held for the ISO Holding
Period. If the optionee recognizes ordinary income upon a
disqualifying disposition, the Company generally will be
entitled to a tax deduction in the same amount. If an Incentive
Stock Option is exercised through the payment of the exercise
price by the delivery of Common Stock, to the extent that the
number of shares received exceeds the number of shares
surrendered, such excess shares will be considered Incentive
Stock Option stock with a zero basis.
Code Section 409A. Awards of Options and
Rights may, in certain instances, result in the deferral of
compensation that is subject to the requirements of
Section 409A of the Code. To date, the U.S. Treasury
Department and Internal Revenue Service have issued only
preliminary guidance regarding the impact of Section 409A
of the Code on the taxation of Options and Rights. Generally, to
the extent that these awards fail to meet certain requirements
under Section 409A of the Code, such awards will be subject
to immediate taxation and tax penalties in the year they vest.
It is the intent of the Company that awards of Options and
Rights under the Employee Plan will be structured and
administered in a manner that complies with the requirements of
Section 409A of the Code.
Compliance with Section 162(m); Consequences of
Change of Control. With certain exceptions,
Section 162(m) of the Code limits the Companys
deduction for compensation in excess of $1 million paid to
certain covered employees (generally the Companys chief
executive officer and its four (4) other highest-paid
executive officers). Compensation paid to covered employees is
not subject to the deduction limitation if it is considered
qualified performance-based compensation within the
meaning of Section 162(m) of the Code. It is the
Companys intent that compensation payable pursuant to
awards of Options and Rights to covered employees qualify as
performance-based compensation. If, however, any provision of
the Employee Plan or an award is later found to make
compensation intended to be performance-based compensation
ineligible for such treatment, the Companys ability to
deduct such compensation may be limited. In addition, if a
change of control of the Company causes awards of Options or
Rights to accelerate vesting, the participants could, in some
cases, be considered to have received excess parachute
payments, which could subject participants to a 20% excise
tax on the excess parachute payments and could result in a
disallowance of the Companys deductions under
Section 280G of the Code.
21
SUMMARY OF 1992 DIRECTOR STOCK OPTION PLAN
The following is a summary description of the Director Plan, is
not a complete statement of the Director Plan and is qualified
in its entirety by reference to the complete text of the
Director Plan, a copy of which is available from the Company
upon request.
Administration. The Director Plan is administered
by the Board or a committee consisting of at least two
(2) non-employee directors of the Company who are appointed
by and serve at the pleasure of the Board of Directors (the
Plan Administrator). The Plan Administrator, from
time to time at its discretion, makes determinations with
respect to the persons who shall be granted Options or Rights,
and the number of shares of the Common Stock that may be
purchased pursuant to such Options or Rights. The interpretation
and construction by the Plan Administrator of any provisions of
the Director Plan or of an Option or Right granted thereunder is
binding and conclusive on all optionees and on their legal
representatives and beneficiaries. The Plan Administrator shall
not have the authority to reprice outstanding Options or Rights
without stockholder approval.
Types of Options. The Options granted under the
Director Plan will be Non-Qualified Stock Options under the Code.
Rights. The Plan Administrator, in its discretion,
may grant Rights either alone, simultaneously with the grant of
an Option and in conjunction therewith, or subsequent to the
grant of an Option and in conjunction therewith or in the
alternative thereto.
Eligibility. Any non-employee director may be
granted Options or Rights under the Director Plan until
November 30, 2012.
Exercise Price. The Plan Administrator shall
determine the exercise price for each Option or Right granted
under the Director Plan; provided, however, that the exercise
price shall not be less than 100% of the fair market value on
the date of grant of the shares to which the Option or Right
relates.
Exercise Period and Exercise of Options or Rights.
An Option or Right may be exercised in whole at any
time, or in part from time to time, within such period or
periods as may be determined by the Plan Administrator and set
forth in the grantees agreement. Options are not
transferable by the optionee except by will or by the laws of
descent and distribution.
Termination; Disability; Death. Upon cessation of
such persons status as a director, an Option or Right
previously granted to the director, unless otherwise specified
by the Plan Administrator and to the extent not previously
exercised, shall terminate and become null and void, provided
that: (i) if the director shall die while in the service of
the Company or within three (3) months of retirement or
within one (1) year of retirement by reason of disability,
the legal representative or heirs of such director shall be
entitled to exercise such Option or Right (to the extent
otherwise exercisable) for a one-year period following the date
of death; and (ii) if the service shall have been
terminated by reason of retirement, disability or removal other
than for cause (as defined in the Director Plan), then such
director shall be entitled to exercise such Option or Right (to
the extent otherwise exercisable) at any time up to
(a) three (3) months after termination by reason of
retirement or removal other than for cause and (b) one
(1) year after termination by reason of disability. If a
director voluntarily terminates his or her service or is
terminated for cause, any Option or Right, unless otherwise
specified by the Plan Administrator, shall immediately terminate.
Payment. The exercise price of shares purchased
pursuant to an Option shall be paid in full at the time of any
exercise either in cash or by certified check; provided,
however, to the extent that the terms of such Option provide,
the purchase price may be paid for, in whole or in part, by
delivering previously-owned shares of Common Stock or, in part,
by promissory note (for not more than 80% of such purchase price
subject to applicable margin requirements).
Adjustments, Amendment or Discontinuance. In the
event of any change in the outstanding Common Stock through
merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares or other like change
in capital structure of the Company, the Plan Administrator
shall make such adjustment to each outstanding Option and Right
that it, in its sole discretion, deems appropriate.
22
In addition, in the
event of any such change, the Plan Administrator shall make any
further adjustment as may be appropriate to the maximum number
of shares which may be acquired under the Director Plan pursuant
to the exercise of Options and Rights, the maximum number of
shares which may be so acquired by one (1) director and the
number of shares and prices per share subject to outstanding
Options and Rights as shall be equitable to prevent dilution or
enlargement of rights under such Options or Rights, and the
determination of the Plan Administrator as to these matters
shall be conclusive.
In the event of a change in control of the Company,
as defined in the Director Plan, all then outstanding Options
and Rights shall immediately become exercisable. The Plan
Administrator, in its discretion, may determine that, upon the
occurrence of a change in control transaction, each Option or
Right outstanding under the Director Plan shall terminate within
a specified number of days after notice to the holder, and such
holder shall receive, with respect to each share subject to such
Option or Right, cash in an amount equal to the excess of the
fair market value of such share immediately prior to such
transaction over the exercise price per share of such Option or
Right.
The Board of Directors or the Plan Administrator, as the case
may be, may, from time to time, amend the Director Plan, or any
outstanding Option or Right consistent with the terms of the
Director Plan, provided that no amendment shall be made, without
the approval of the stockholders of the Company, that will
(i) increase the total number of shares reserved for
Options under the Director Plan (other than an increase
resulting from an adjustment of outstanding Common Stock),
(ii) reduce the exercise price of any Option granted under
the Director Plan below the price required by the Director Plan,
(iii) modify the provisions of the Director Plan relating
to eligibility or (iv) materially increase the benefits
accruing to participants under the Director Plan. In addition,
the rights and obligations under any Option or Right granted
before amendment of the Director Plan or any unexercised portion
of such Option or Right shall not be adversely affected by
amendment of the Director Plan, Option or Right without the
consent of the holder of such Option or Right. The Board of
Directors may at any time suspend or terminate the Director Plan.
Term of Plan. Options and Rights may be granted
under the Director Plan until November 30, 2012.
Federal Income Tax Consequences
The following is a brief summary of the principal United States
federal income tax consequences of the grant and exercise of
Options or Rights under the Director Plan, and is based upon an
interpretation of present federal tax laws and regulations and
may be inapplicable if such laws and regulations are changed.
This summary is not intended to be exhaustive and, among other
items, does not describe state, local or foreign tax
consequences. Each director receiving a grant of Options or
Rights should consult with his or her personal tax advisor
regarding the federal, state, local or foreign tax consequences
of participating in the Director Plan. To the extent awards
under the Director Plan are subject to Section 409A of the
Code, the following description assumes that such awards will be
designed to conform to the requirements of Code
Section 409A and the regulations promulgated thereunder (or
an exception thereto). The Director Plan is not subject to the
protective provisions of the Employee Retirement Security Act of
1974 and is not qualified under Section 401(a) of the Code.
An option to be issued under the Director Plan will be
designated as a Non-Qualified Stock Option. A Non-Qualified
Stock Option is not included as compensation income at the time
of grant. Rather, the optionee realizes compensation income only
when the Non-Qualified Stock Option is exercised. The amount of
income realized is equal to the excess of the fair market value
of the shares received as of the date of exercise over the sum
of the exercise price plus the amount, if any, paid by the
optionee for the Non-Qualified Stock Option.
If a Non-Qualified Stock Option is exercised solely through
payment of the exercise price by the delivery of Common Stock,
to the extent that the number of shares received by the optionee
exceeds the number of shares surrendered, ordinary income will
be realized by the optionee at that time in an amount equal to
the fair market value of such excess shares. The tax basis of
such excess shares will be equal to the income recognized by the
director.
23
Generally, the optionees basis in the shares will be the
exercise price plus the compensation income realized at the time
of exercise and the amount, if any, paid by the optionee for the
Non-Qualified Stock Option. Upon the sale of any such shares,
the capital gain or loss will be short-term if the shares are
disposed of within one (1) year after the option is
exercised; such short-term gains are taxable as ordinary income.
If the shares were held more than twelve (12) months as of
the sale date, the gain is taxable as a long-term capital gain
at a maximum rate of 15%.
If a Non-Qualified Stock Option expires without being exercised,
the optionee will have no tax consequences unless the optionee
paid for the Non-Qualified Stock Option. In such case, the
optionee will recognize a loss in the amount of the price paid
by the optionee for the Non-Qualified Stock Option.
The Company is generally entitled to a tax deduction in an
amount equal to the compensation income recognized by the
optionee. This deduction is allowed in the Companys
taxable year in which the income is included as compensation to
the optionee.
If the option exercise price is paid by an optionee in part by
promissory note, the interest paid by the optionee under the
promissory note is investment indebtedness which is generally
deductible by the optionee as an itemized deduction from gross
income to the extent the optionee has net investment income;
interest that is disallowed because of this limitation may be
carried over to succeeding tax years and is deductible in the
carryover year, subject to the net investment income limitation.
Rights are treated very similarly to Non-Qualified Stock Options
for tax purposes. The holder of a Right will not normally
realize any taxable income upon the grant of a Right. Upon the
exercise of a Right, the person exercising the Right will
realize ordinary income equal to either: (i) the cash
received upon the exercise of the Right; or (ii) if shares
are received upon the exercise of the Right, the fair market
value of such shares as of the exercise date. The basis of any
shares acquired upon exercise of a Right will be their fair
market value on the date of exercise, and the holding period
will commence at that time. The Company will be entitled to a
tax deduction for compensation paid in the same amount that the
holder of the Right realizes as ordinary income.
Code Section 409A. Awards of Options and
Rights may, in certain instances, result in the deferral of
compensation that is subject to the requirements of
Section 409A of the Code. To date, the U.S. Treasury
Department and Internal Revenue Service have issued only
preliminary guidance regarding the impact of Section 409A
of the Code on the taxation of Options and Rights. Generally, to
the extent that these awards fail to meet certain requirements
under Section 409A of the Code, such awards will be subject
to immediate taxation and tax penalties in the year they vest.
It is the intent of the Company that awards of Options and
Rights under the Director Plan will be structured and
administered in a manner that complies with the requirements of
Section 409A of the Code.
INDEPENDENT PUBLIC ACCOUNTANTS
Fees Billed to the Company by BDO during Fiscal 2006 and
Fiscal 2005
Audit Fees: An aggregate of $1,445,000 was billed
for professional services and expenses rendered for the audit of
the Companys annual financial statements for Fiscal 2006,
attestation of managements report on the Companys
internal control over financial reporting and for the review of
financial statements included in the Companys quarterly
reports on
Form 10-Q during
Fiscal 2006. An aggregate of $1,416,000 was billed for
professional services and expenses rendered for the audit of the
Companys annual financial statements for Fiscal 2005,
attestation of managements report on the Companys
internal control over financial reporting and for the review of
financial statements included in the Companys quarterly
report on
Form 10-Q for the
third quarter of Fiscal 2005.
Audit-Related Fees: No audit-related fees were
billed by BDO during Fiscal 2006 or Fiscal 2005.
Tax Fees: No tax fees were billed by BDO during
Fiscal 2006 or Fiscal 2005.
24
All Other Fees: BDO did not render any other
professional services to the Company during Fiscal 2006 or
Fiscal 2005.
All services performed by BDO were pre-approved by the Audit
Committee or the Audit Committee chair.
FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
A copy of the 2006
Form 10-K is
available to stockholders. A stockholder may obtain a copy of
the 2006 Form 10-K
free of charge on the Companys website or by writing to
the Investor Relations Department, Black Box Corporation,
1000 Park Drive, Lawrence, Pennsylvania 15055 (a copy of any
exhibits thereto will be provided upon payment of a reasonable
charge limited to the Companys cost of providing such
exhibits).
SOLICITATION OF PROXIES
The Company will pay the expenses in connection with the
printing, assembling and mailing to the holders of Common Stock
of the Company the Notice of Annual Meeting of Stockholders,
this Proxy Statement and the accompanying form of proxy. In
addition to the use of the mails, directors, officers or regular
employees of the Company may solicit proxies personally or by
telephone or telegraph. The Company may request the persons
holding stock in their names, or in the names of their nominees,
to send proxy material to, and obtain proxies from, their
principals, and will reimburse such persons for their expense in
so doing.
STOCKHOLDER NOMINATIONS AND PROPOSALS
Stockholders who believe they are eligible to have their
proposals included in the Companys proxy statement for the
annual meeting expected to be held in August 2007, in addition
to other applicable requirements established by the SEC, must
ensure that their proposals are received by the Secretary of the
Company not later than March 1, 2007.
The By-laws establish an advance notice procedure for
stockholders to make nominations for the position of director
and to propose business to be transacted at an annual meeting.
The By-laws provide that notice of nominations for director and
proposals for business must be given to the Secretary of the
Company not later than 150 days prior to the anniversary
date of the prior years annual meeting. For the annual
meeting expected to be held in August 2007, notice of
nominations and proposals under this provision must be received
by March 11, 2007.
Such notice must set forth in reasonable detail information
concerning the nominee (in the case of a nomination for election
to the Board of Directors) or the substance of the proposal (in
the case of any other stockholder proposal), and shall include:
(a) the name and residence address and business address of
the stockholder who intends to present the nomination or other
proposal or of any person who participates or is expected to
participate in making such nomination and of the person or
persons, if any, to be nominated and the principal occupation or
employment and the name, type of business and address of the
business and address of the corporation or other organization in
which such employment is carried on of each such stockholder,
participant and nominee; (b) a representation that the
proponent of the proposal is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to present the nomination
or other proposal specified in the notice; (c) a
description of all arrangements or understandings between the
proponent and any other person or persons (naming such person or
persons) pursuant to which the nomination or other proposal is
to be made by the proponent; (d) such other information
regarding each proposal and each nominee as would have been
required to be included in a proxy statement filed pursuant to
the proxy rules of the SEC had the nomination or other proposal
been made by the Board of Directors; and (e) the consent of
each nominee, if any, to serve as a director of the Company, if
elected. Within fifteen (15) days following the receipt by
the Secretary of a notice of nomination or proposal pursuant
hereto, the Secretary shall advise the proponent in writing of
any deficiencies in the notice and of any additional information the Company is requiring to determine the
eligibility of the proposed nominee or the substance of the
proposal.
25
A proponent who has been notified of deficiencies in
the notice of nomination or proposal and/or of the need for
additional information shall cure such deficiencies and/or
provide such additional information within fifteen
(15) days after receipt of the notice of such deficiencies
and/or the need for additional information. The presiding
officer of a meeting of stockholders may, in his or her sole
discretion, refuse to acknowledge a nomination or other proposal
presented by any person that does not comply with the foregoing
procedure and, upon his or her instructions, all votes cast for
such nominee or with respect to such proposal may be disregarded.
The By-laws do not limit or restrict the ability of a
stockholder to present any proposal made by such stockholder in
accordance with SEC requirements. A copy of the By-laws is
available from the Company upon request.
OTHER MATTERS
Management does not intend to present nor, in accordance with
the By-laws, has it received proper notice from any person who
intends to present, any matter for action by stockholders at the
Annual Meeting to be held on August 8, 2006, other than as
stated in the Notice of Annual Meeting of Stockholders
accompanying this Proxy Statement. The enclosed proxy, however,
confers discretionary authority with respect to the transaction
of any other business that properly may come before the meeting,
and it is the intention of the persons named in the enclosed
proxy to vote on any such matters in accordance with their best
judgment.
26
ANNUAL MEETING OF STOCKHOLDERS OF
BLACK BOX CORPORATION
August 8, 2006
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
â Please detach along perforated line and mail in the envelope provided. â
n
The
Board of Directors recommends a vote FOR each of the
nominees listed and FOR proposal numbers 2, 3 and 4.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
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Election of six (6) members of the Board of Directors: |
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NOMINEES: |
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FOR ALL NOMINEES
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William F. Andrews
Richard L. Crouch |
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WITHHOLD AUTHORITY
FOR ALL NOMINEES
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Thomas W. Golonski
Thomas G. Greig |
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Edward A. Nicholson, Ph.D. |
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FOR ALL EXCEPT
(See instructions below)
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Fred C. Young |
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INSTRUCTION: |
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To withhold authority to vote for
any individual nominee(s), mark FOR ALL EXCEPT and fill
in the circle next to each nominee you wish to withhold, as
shown here: l |
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To change the address on your account, please check
the box at right and indicate your new address in
the address space above. Please note that changes to
the registered name(s) on the account may not be
submitted via this method.
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The approval of an amendment to the 1992 Stock Option Plan to
increase the number of shares authorized under that Plan.
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The approval of an amendment to the 1992 Director Stock
Option Plan to increase the number of shares authorized under
that Plan.
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Ratification of the appointment of BDO Seidman, LLP as the
independent registered public accounting firm of the Company
for the fiscal year ending March 31, 2007.
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The Board of Directors has established the close of business on
Friday, June 9, 2006 as the record date for the determination of the
stockholders entitled to notice of and to vote at the Annual
Meeting.
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Signature of Stockholder
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Signature of Stockholder
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in partnership name by
authorized person.
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BLACK BOX CORPORATION
1000 Park Drive
Lawrence, Pennsylvania 15055
This Proxy is Solicited on Behalf of the
Board of Directors of the Company
The undersigned stockholder hereby appoints Fred C. Young and Thomas G. Greig, and each of
them, as proxies for the undersigned, each with full power of substitution for and in the name of
the undersigned to act for the undersigned and to consider and vote, as designated on the reverse,
all of the shares of stock of Black Box Corporation (the Company) that the undersigned is
entitled to vote at the 2006 Annual Meeting of Stockholders of the Company to be held on Tuesday,
August 8, 2006, at 12:30 p.m. Eastern Daylight Time, at the offices of the Company at 1000 Park
Drive, Lawrence, Pennsylvania 15055, on the following matters:
Unless otherwise specified in the squares provided, the proxies shall vote in the election of
directors FOR the nominees listed and FOR each of the other proposals, and shall have discretionary
power to vote upon such other matters as may properly come before the meeting or any adjournment
thereof.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF STOCKHOLDERS OF
BLACK BOX CORPORATION
August 8, 2006
PROXY VOTING INSTRUCTIONS
MAIL - Date, sign and mail your proxy card in the
envelope provided as soon as possible.
- OR -
TELEPHONE - Call toll-free 1-800-PROXIES from
any touch-tone telephone and follow the instructions. Have your control number and proxy card
available when you call.
- OR -
INTERNET - Access www.voteproxy.com and
follow the on-screen instructions. Have your control
number available when you access the web page.
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COMPANY NUMBER
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ACCOUNT NUMBER
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You may enter your voting instructions at 1-800-PROXIES or www.voteproxy.com up until 11:59
PM Eastern Daylight Time the day before the cut-off or meeting date.
â Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. â
n
The
Board of Directors recommends a vote FOR each of the
nominees listed and FOR proposal numbers 2, 3 and 4.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
1. |
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Election of six (6) members of the Board of Directors: |
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NOMINEES: |
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FOR ALL NOMINEES
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¡
¡
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William F. Andrews
Richard L. Crouch |
o
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WITHHOLD AUTHORITY
FOR ALL NOMINEES
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¡
¡
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Thomas W. Golonski
Thomas G. Greig |
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¡
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Edward A. Nicholson, Ph.D. |
o
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FOR ALL EXCEPT
(See instructions below)
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¡
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Fred C. Young |
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INSTRUCTION: |
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To withhold authority to vote for any individual nominee(s), mark FOR ALL
EXCEPT and fill in the circle next to each nominee you wish to withhold, as shown here: l |
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
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The approval of an amendment to the 1992 Stock Option Plan to
increase the number of shares authorized under that Plan.
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3. |
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The approval of an amendment to the 1992 Director Stock
Option Plan to increase the number of shares authorized under
that Plan.
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4. |
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Ratification of the appointment of BDO Seidman, LLP as the
independent registered public accounting firm of the Company
for the fiscal year ending March 31, 2007.
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The Board of Directors has established the close of business on
Friday, June 9, 2006 as the record date for the determination of the
stockholders entitled to notice of and to vote at the Annual
Meeting.
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Signature of Stockholder
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Signature of Stockholder
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Date:
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in partnership name by
authorized person.
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