Black Box Corporation DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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BLACK BOX
CORPORATION
1000 Park Drive
Lawrence, Pennsylvania 15055
TABLE OF CONTENTS
Notice of
Annual Meeting of Stockholders
to be held on August 12, 2008
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 12, 2008, at 12:30 p.m. Eastern Daylight
Time, to consider and act upon the following matters:
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1.
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The election of six (6) members of the Board of Directors;
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2.
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The approval of the 2008 Long-Term Incentive Plan; and
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3.
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The 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, 2009.
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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 Monday,
June 16, 2008 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.
BY ORDER OF THE BOARD OF DIRECTORS
Michael McAndrew, Secretary
June 24, 2008
BLACK BOX
CORPORATION
1000 Park Drive
Lawrence, Pennsylvania 15055
PROXY
STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS
August 12, 2008
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, or we), in connection with the
solicitation by our Board of Directors (Board of
Directors or Board) of proxies to be voted at
the Annual Meeting of Stockholders (the Annual
Meeting) scheduled to be held on Tuesday, August 12,
2008, 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 26, 2008.
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting to Be Held on August 12,
2008:
This proxy statement and the Companys 2008 Annual
Report to Stockholders are available for you to review online at
www.proxydocs.com/bbox.
Only holders of Common Stock of record as of the close of
business on Monday, June 16, 2008 are entitled to notice of
and to vote at the Annual Meeting and at any adjournment
thereof. On that date, 17,516,305 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 each of the nominees named
below for election as director, FOR approval of the 2008
Long-Term Incentive Plan and FOR ratification of the appointment
of BDO Seidman, LLP as our independent registered public
accounting firm for the fiscal year ending March 31, 2009.
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 our Second Restated Certificate of Incorporation, as
amended (Certificate of Incorporation), Amended and
Restated By-laws (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.
Our Board of Directors unanimously recommends a vote FOR each
of the nominees named below for election as director, FOR
approval of the 2008 Long-Term Incentive Plan and FOR
ratification of the appointment of BDO Seidman, LLP as our
independent registered public accounting firm for the fiscal
year ending March 31, 2009.
ANNUAL
MEETING MATTERS
Proposal 1
Election of Directors
Our By-laws provide that the number of directors constituting
our entire Board shall be nine (9), or such other number as
shall be fixed by the stockholders or by our Board. At present,
our Board has fixed the number of directors at six
(6) members. All directors are independent under the
listing standards of The Nasdaq Stock Market
(Nasdaq) except for R. Terry Blakemore as a result
of his position as the Companys President and Chief
Executive Officer.
All of our directors stand for election each year. Our Board has
nominated six (6) persons for election to the position of
director 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 our stockholders to remove any director as provided in
our By-laws. 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 our Board to
fill a vacancy will serve until his or her successor is elected
and qualified or until his or her earlier death, resignation or
removal. If our Board increases the number of directors, it 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 2009.
The persons named as proxies on the enclosed proxy card were
selected by our Board and have advised our Board 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 our Board of Directors: William F.
Andrews, R. Terry Blakemore, Richard L. Crouch, Thomas W.
Golonski, Thomas G. Greig and Edward A. Nicholson, Ph.D.
All of the nominees presently serve as directors on our Board.
Our Board 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, the persons named as proxies intend to vote
for such substitute as may be nominated by our Board of
Directors.
The following sets forth certain information concerning nominees
for election to our Board of Directors at the Annual Meeting:
William F. Andrews, 76, was elected as a director
of the Company on May 18, 1992. Mr. Andrews currently
is Chairman of Corrections Corporation of America (private
prisons), Chairman of Katy Industries, Inc. (diversified
manufacturing company) and Chairman of SVP Holdings Limited
(Singer sewing machines). 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.
R. Terry Blakemore, 51, was selected to be a
director of the Company on October 13, 2007 and was named
as President and Chief Executive Officer of the Company on the
same date. He had served in the capacity of Interim President
and Chief Executive Officer of the Company since May 21,
2007. Previously, on May 15, 2007, the Board had named
Mr. Blakemore a Senior Vice President of the Company. Prior
to becoming a Senior Vice President, Mr. Blakemore served
as a manager of business development and, prior thereto, as a
manager of the Companys Voice Services business unit.
Mr. Blakemore has been with the Company since 1999.
Richard L. Crouch, 61, was elected as 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
(SEC) services consultant. He retired from the firm
on July 2, 2004.
Thomas W. Golonski, 65, was selected to be a
director of the Company on February 11, 2003 and was
elected by our 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
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2005. He retired from National City in 2005. He is active in
other charitable, educational and health care organizations.
Thomas G. Greig, 60, was elected as 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., 68, was elected
as 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 Brentwood Bank, publicly-held Shopsmith
Inc. and several regional economic, charitable and cultural
organizations.
Our Board of Directors unanimously recommends that our
stockholders vote FOR each of the nominees for election to our
Board.
Proposal 2
Approval of the 2008 Long-Term Incentive Plan
We currently have a 1992 Stock Option Plan, as amended (the
Employee Plan), and a 1992 Director Stock
Option Plan, as amended (the Director Plan). The
Employee Plan and the Director Plan do not provide us with the
flexibility of a broad-based long-term incentive plan, including
the ability to make performance-based awards that qualify for
favorable tax treatment. Accordingly, our Board has adopted,
subject to stockholder approval, the 2008 Long-Term Incentive
Plan, the complete text of which is attached to this proxy
statement as Exhibit I (the Incentive Plan).
The purpose of the Incentive Plan is to advance our interests
and the interests of our stockholders by providing incentives,
under one consolidated plan, to certain employees, directors,
consultants and other individuals who contribute significantly
to our strategic and long-term performance objectives and
growth. A summary of the Incentive Plan is set forth in
the Summary of Incentive Plan section of this proxy
statement.
Our Board believes that the Incentive Plan will:
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maintain and strengthen our ability to attract and retain key
employees, directors, consultants and certain other individuals
providing services to us and to motivate them to remain focused
on long-term stockholder value performance
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support our strategy of using equity as a key component of
employee and director total compensation
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allow us to implement our executive compensation strategy
discussed in the Compensation Discussion and
Analysis section of this proxy statement by providing
for a variety of equity awards and cash awards that could have
tax advantages and align our compensation practices with market
trends and
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allow us to lower the cash component of our executive
compensation mix by providing for a variety of equity-based
compensation vehicles.
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As of June 16, 2008, the number of shares of Common Stock
to be issued under our Employee Plan and our Director Plan upon
the exercise of outstanding options was 3,628,494, with a
weighted average exercise price of $36.88 per share and a
weighted average remaining term of 7.06 years. The number
of shares of Common Stock available for future grants under such
plans was 883,937, of which 884 were available under the
Director Plan. If the Incentive Plan is approved by our
stockholders, no further grants would be made under the Employee
Plan or the Director Plan, and the number of shares of Common
Stock available for future grants under such plans at that time
would be added to the number of shares available for issuance
under the Incentive Plan. In addition, any shares of Common
Stock not issued under the Employee Plan or the Director Plan as
a result of the cancellation or forfeiture of outstanding stock
options would be added to the shares available for issuance
under the Incentive Plan.
The Incentive Plan provides for the issuance of 900,000
additional shares of Common Stock. There also will be added to
the Incentive Plan the number of shares of Common Stock that
remain available for the grant of awards under the Employee Plan
and the Director Plan on the date of stockholder approval of the
Incentive Plan, plus the number of shares subject to stock
options outstanding under the Employee Plan and the Director
Plan on the date of stockholder approval of the Incentive Plan
that are forfeited or cancelled prior to exercise. We have
analyzed the impact of outstanding stock options and the number
of shares of Common Stock available for the grant of share-
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based awards under the Employee Plan, the Director Plan and the
proposed Incentive Plan, as described above, and have determined
that the dilutive impact of outstanding options, including such
additional shares, is within certain investor-based guidelines
and lower than the average dilutive impact for companies in our
industry group. In order to minimize the dilutive effect of the
Incentive Plan, we have incorporated a fungible share design
into the plan whereby each share of Common Stock subject to an
award that is not a stock option or stock appreciation right
counts as 1.87 shares against the number of shares we have
available for issuance under the Incentive Plan.
As of March 31, 2008, 96.70% of the total outstanding
options granted to current employees and directors were vested.
Consequently, our Board believes that key employees and
directors continue to retain their options because they are
personally committed to our long-term profit goals.
Additionally, the subsequent opportunity for stock appreciation
has the effect of aligning their financial goals with those of
our stockholders. Because of the retention of vested options,
the number of shares outstanding attributable to the Employee
Plan and the Director Plan is higher than if employees and
directors were to have exercised such options and sold the
shares.
Our share-based award plans also provide additional free cash
flow to us as options are exercised from time to time. As of
March 31, 2008, we have utilized cash generated from
operating activities and cash from stock option exercises to
repurchase 7.6 million shares of Common Stock for
approximately $323 million through our stock repurchase
program initiated in April 1999.
For these reasons, our Board believes that approval of the
Incentive Plan 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 the
adoption of the Incentive Plan. Unless otherwise directed by our
stockholders, proxies will be voted FOR this proposal.
Because our directors are eligible to receive awards under the
Incentive Plan, each of them may be deemed to have a personal
interest in the adoption of this proposal.
Our Board of Directors unanimously recommends that our
stockholders vote FOR approval of Proposal 2.
Proposal 3
Ratification of the Appointment of Independent Registered Public
Accounting Firm
In May 2008, the Audit Committee of our Board appointed BDO
Seidman, LLP (BDO) as our independent registered
public accounting firm for the fiscal year ending March 31,
2009. As a sound governance matter, our Audit Committee has
determined to submit the appointment to our 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 our stockholders of such appointment. Unless
otherwise directed by our stockholders, proxies will be voted
FOR the ratification of the appointment of BDO as our
independent registered public accounting firm for the fiscal
year ending March 31, 2009. In the event that this
appointment is not ratified by the stockholders, our Audit
Committee will consider this vote in determining its future
appointment of our independent registered public accounting
firm. Even if the appointment is ratified, our Audit Committee,
in its discretion, may change the appointment at any time during
the year if it determines that such change would be in our and
our stockholders best interests.
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.
Our Board of Directors unanimously recommends that our
stockholders vote FOR approval of Proposal 3.
4
BOARD OF
DIRECTORS AND CERTAIN BOARD COMMITTEES
Our Board of Directors held fifteen (15) meetings during
the fiscal year ended March 31, 2008 (Fiscal
2008). During Fiscal 2008, each director attended not
fewer than seventy-five percent (75%) of the meetings of our
Board and each committee on which such director served during
the period in which such director served on our Board. Executive
sessions of the non-employee members of our Board are scheduled
for each regular Board meeting and many committee meetings and
many regular Board meetings and certain committee meetings
include such an executive session.
Stockholders can communicate with our Board or individual
directors by writing to the Companys Secretary at: Black
Box Corporation, 1000 Park Drive, Lawrence, Pennsylvania 15055.
Our Board believes that our annual meetings also are appropriate
for stockholder communications with our Board. Our 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
October 2007.
Our Board of Directors has four (4) standing committees:
the Audit Committee, the Compensation Committee, the Nominating
Committee and the Governance Committee.
Audit
Committee
Our Audit Committee consists of Mr. Richard L. Crouch, as
chair, Mr. Thomas W. Golonski and Mr. Thomas G. Greig.
Each member of this committee is independent under Nasdaqs
listing standards for audit committee members.
Our Audit Committees duties include:
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sole authority and direct responsibility over the selection
(subject to stockholder ratification if the committee so elects)
of our independent registered public accounting firm
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evaluation, retention and replacement of our independent
registered public accounting firm
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responsibility for determining the compensation and other terms
of engagement of such independent auditors
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Our Audit Committee has such other duties and responsibilities
as are set forth in its written charter adopted by our Board, a
copy of which is posted in the About Us section of
our Web site at
http://www.blackbox.com.
These other 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
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 our 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. Our Audit
Committee has delegated authority for pre-approval of audit
services and permitted non-audit services to its chair, subject
to subsequent ratification of such pre-approval at the next
subsequent regular meeting of the Audit Committee.
All services performed by BDO during Fiscal 2008 were either
approved by our Audit Committee or approved by our Audit
Committee chair, and later ratified by the Audit Committee,
prior to the performance of such services.
Our Board has determined that all of the members of our 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.
Our Board has also 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.
Our Audit Committee met seventeen (17) times in Fiscal 2008.
Compensation
Committee
Our Compensation Committee consists of Mr. Thomas W.
Golonski, as chair, Mr. Richard L. Crouch and
Mr. Thomas G. Greig. Each member of this committee is
independent under Nasdaqs listing standards.
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Our Compensation Committees duties include:
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reviewing and recommending to our Board the total compensation
of our executive officers
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administering our stock option plans and the proposed Incentive
Plan, if approved by our stockholders
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Our Compensation Committee operates under a written charter
adopted by our Board, a copy of which is posted in the
About Us section of our Web site. For a description
of our Compensation Committees processes and procedures
for the consideration and determination of executive officer
compensation, see the Compensation Discussion and
Analysis section of this proxy statement.
During Fiscal 2008, our Compensation Committee engaged
Solenture, Inc. to provide information regarding competitive
executive compensation data, including identification of an
appropriate peer group for comparison purposes, an analysis of
executive compensation levels and programs and
market-competitive compensation data. During Fiscal 2008, our
Compensation Committee also engaged Towers, Perrin,
Forster & Crosby, Inc. (Towers Perrin)
to develop an information base including an understanding of our
strategic objectives and executive compensation preferences to
serve as the basis for identifying appropriate executive
long-term compensation incentives, conduct analytics on the
current stock option program to determine the feasibility of
future grants, identify possible efficiencies in stock option
grant practice and valuation approach, understand and identify
alternative long-term incentive vehicle(s) for executives and
develop a strawmodel long-term incentive design for executives
based on preferences identified during design team meetings. In
connection with such services, Towers Perrin further defined the
peer group. Towers Perrin also was engaged by our Compensation
Committee to assist in the development of the Incentive Plan and
to review this proxy statement. The scope of services of any
executive compensation consultant is approved by the
Compensation Committee or its chair.
Our Compensation Committee met nine (9) times in Fiscal
2008.
Nominating
Committee
Our Nominating Committee consists of Edward A.
Nicholson, Ph.D., as chair, Mr. William F. Andrews and
Mr. Thomas G. Greig. Each member of this committee is
independent under Nasdaqs listing standards.
Our Nominating Committees duties include:
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identifying and evaluating potential candidates for any Board
vacancies, including any individuals recommended by committee
members, other Board members, management or our current
stockholders or identified by third-party executive search firms
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recommending to our Board individuals to be nominated for
election as directors by stockholders at our annual meeting
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recommending to our Board, from time to time, individuals to be
elected by it to fill Board vacancies
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This committee considers the independence, experience relative
to our business and the needs of our Board, diversity and the
ability to represent our 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
possess leadership qualities.
It is our Nominating Committees policy to consider
stockholder proposals for nominees for election as directors
that are nominated in accordance with our Certificate of
Incorporation and our By-laws, and other applicable laws,
including the rules and regulations of the SEC and any stock
market on which our 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 the
Stockholder Nominations and Proposals section
of this proxy statement for a description of the procedures to
be followed in order to submit a recommendation for a nominee.
Our Nominating Committee operates under a written charter
adopted by our Board, a copy of which is posted in the
About Us section of our Web site.
The Nominating Committee met three (3) times in Fiscal 2008.
6
Governance
Committee
Our Governance Committee consists of Mr. William F.
Andrews, as chair, Mr. Thomas W. Golonski and Edward A.
Nicholson, Ph.D. Each member of this committee is
independent under Nasdaqs listing standards.
Our Governance Committees duties include:
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responsibility for reviewing, on an ongoing basis, the corporate
governance practices and principles established and implemented
by our Board and management
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monitoring trends and regulatory requirements in corporate
governance and recommending to our Board any changes in our
corporate governance practices and functions based upon such
trends and regulatory requirements
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performing an annual evaluation of the objectives and
performance of the members of our Board in connection with its
review of the compensation paid to Board members
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Director compensation historically had been determined based on
the collective experience and knowledge of the members of our
Governance Committee. During Fiscal 2008, our Governance
Committee engaged Solenture, Inc. to provide information
regarding competitive director compensation data, including
identification of an appropriate peer group for comparison
purposes, an analysis of director compensation levels and
programs and market-competitive compensation data.
Our Governance Committee monitors our corporate governance
scoring as developed by Institutional Shareholder Services
(ISS), an independent service. Our ISS Corporate
Governance Quotient score as of June 2008 indicated that we
outperformed 75% of the companies in the technology hardware and
equipment group and 52% of the companies in the
Standard & Poors 600 Index.
Our Governance Committee operates under a written charter
adopted by our Board, a copy of which is posted in the
About Us section of our Web site.
Our Governance Committee met four (4) times in Fiscal 2008.
LITIGATION
INVOLVING DIRECTORS AND OFFICERS
In November 2006, two stockholder derivative lawsuits were filed
against the Company itself, as a nominal defendant, and several
of our current and former officers and directors, including Fred
C. Young, Michael McAndrew, Francis Wertheimber, William F.
Andrews and Thomas G. Greig, in the United States District Court
for the Western District of Pennsylvania. The two substantially
identical stockholder derivative complaints allege that the
individual defendants improperly backdated grants of stock
options to several officers and directors in violation of our
stockholder-approved stock option plans, improperly recorded and
accounted for backdated stock options in violation of generally
accepted accounting principles (GAAP), improperly
took tax deductions based on backdated stock options in
violation of the Internal Revenue Code of 1986, as amended (the
Code), produced and disseminated false financial
statements and SEC filings to our stockholders and to the market
that improperly recorded and accounted for the backdated option
grants, concealed the alleged improper backdating of stock
options and obtained substantial benefits from sales of our
Common Stock while in the possession of material inside
information. The complaints seek damages on behalf of the
Company against certain current and former officers and
directors and allege breach of fiduciary duty, unjust
enrichment, securities law violations and other claims.
The two lawsuits have been consolidated into a single action as
In re Black Box Corporation Derivative Litigation, Master
File
No. 2:06-CV-1531-JFC,
and plaintiffs filed a consolidated amended complaint on
January 29, 2007. The parties have stipulated that
responses by the defendants, including the Company, are due on
or before September 15, 2008 and the court has entered an
order to that effect.
7
POLICIES
AND PROCEDURES RELATED TO THE APPROVAL
OF TRANSACTIONS WITH RELATED PERSONS
Our policies and procedures for review, approval or ratification
of transactions with related persons are not contained in a
single policy or procedure; instead, relevant aspects of such
program are drawn from various corporate documents. Most
importantly, our Audit Committees charter provides that it
must review and, if appropriate, approve or ratify all
transactions between us and any related persons.
Our Standards of Business Conduct require that all of our and
our subsidiaries directors, officers and employees refrain
from activities that might involve a conflict of interest.
Additionally, our Code of Ethics provides that each of our and
our subsidiaries directors, officers and employees must
openly and honestly handle any actual, apparent or potential
conflict between that individuals personal and business
relationships and our interests. Before making any investment,
accepting any position or benefit, participating in any
transaction or business arrangement or otherwise acting in a
manner that creates or appears to create a conflict of interest,
such person must make a full disclosure of all relevant facts
and circumstances to, and obtain the prior written approval of,
our Chief Financial Officer or our General Counsel. Our Chief
Financial Officer and our General Counsel make reports to our
Audit Committee, pursuant to the terms of its charter, regarding
compliance with our Code of Ethics. Further, our Chief Financial
Officer makes reports to our Audit Committee with respect to
proposed related party transactions for which that
committees approval would be required.
We did not participate in any transactions with related persons
during Fiscal 2008 and there are no currently-proposed
transactions with related persons.
COMPENSATION
OF DIRECTORS
The following table sets forth the compensation of our
non-employee directors in Fiscal 2008:
DIRECTOR
COMPENSATION FISCAL 2008
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Name(1)
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Fees Earned
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Option
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Total
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or Paid
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Awards(4)(5)(6)
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($)
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in
Cash(2)(3)
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($)
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($)
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William F. Andrews
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51,125
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54,964
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106,089
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Richard L. Crouch
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82,625
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54,964
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137,589
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Thomas W. Golonski
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81,625
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54,964
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136,589
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Thomas G. Greig
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138,125
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54,964
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193,089
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Edward A. Nicholson, Ph.D.
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53,125
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54,964
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108,089
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(1)
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Fred C. Young was a director until his resignation on
May 20, 2007 and R. Terry Blakemore became a director on
October 13, 2007. The compensation received by
Messrs. Young and Blakemore for Fiscal 2008 is reported in
the Summary Compensation Table and other
tables in this proxy statement. They did not receive any
additional compensation in connection with their service on our
Board. |
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(2)
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Effective for the period from April 1, 2007 through
September 30, 2007 (the First Half of Fiscal
2008), each of our non-employee directors received an
annual fee at the rate of $7,500 per annum and, effective for
the period from October 1, 2007 through March 31, 2008
(the Second Half of Fiscal 2008), received an annual
fee at the rate of $35,000 per annum, paid quarterly. Our
non-executive Chairman of the Board also received an annual fee
of $60,000, paid quarterly. Our Audit Committee chair received
an annual fee at the rate of $6,000 during the First Half of
Fiscal 2008 and $15,000 during the Second Half of Fiscal 2008,
paid quarterly. The chairperson of each of the Compensation
Committee, Nominating Committee and |
8
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Governance Committee received an annual fee at the rate of
$5,000 for the Second Half of Fiscal 2008, paid quarterly. |
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(3)
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For each Board meeting attended in person on or prior to
May 20, 2007, each Board member received a fee of $375. For
each Board meeting held after May 20, 2007, each director
received a fee of $2,000 for each Board meeting attended in
person and $1,000 for each Board meeting attended by telephone.
Audit Committee members received a fee of $1,500 for each
meeting of the committee attended in person or by telephone
during Fiscal 2008. Members of the Compensation Committee,
Governance Committee and Nominating Committee received a fee of
$1,000 for each meeting of the respective committee held after
May 20, 2007 attended in person or by telephone. |
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(4)
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Our Board and our stockholders have adopted the Director Plan,
and have authorized the issuance of stock options and stock
appreciation rights covering up to 270,000 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, our Compensation Committee,
upon recommendation of the Governance Committee and approval by
the Board, may grant stock options and stock appreciation rights
to our non-employee directors. If our stockholders approve the
Incentive Plan, no further grants will be made under the
Director Plan. |
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(5)
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Reflects the dollar amount recognized for financial statement
reporting purposes for Fiscal 2008 in accordance with Statement
of Financial Accounting Standards No. 123 (revised 2004),
Share-Based Payment (SFAS 123(R))
and, thus, includes amounts from awards granted in and prior to
Fiscal 2008. The weighted-average assumptions underlying the
valuation of these stock options under the Black-Scholes option
pricing model are as follows: expected life of 5.46 years;
volatility of 49.41%; a risk free interest rate of 4.49% and a
dividend yield of 0.6%. No options were granted to our
non-employee directors in Fiscal 2008. In May 2008, our
Compensation Committee approved, based on the recommendation of
the Governance Committee after its review of information
provided by its compensation consultant and the available shares
in the Director Plan, and after Board approval, a grant of a
stock option under the Director Plan to each non-employee
director to purchase 6,000 shares of Common Stock. Such
stock option grant was consistent with the recommendation of the
compensation consultant. Our Compensation Committee also
discussed the timing of these stock option grants and determined
that the grant date should be after the Companys earnings
release regarding its Fiscal 2008 financial results.
Accordingly, all such stock options were granted on May 27,
2008 with an exercise price of $28.71, the fair market value of
the Common Stock on the grant date. |
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(6)
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The following table sets forth the outstanding options, both
exercisable and unexercisable, held by each non-employee
director as of March 31, 2008: |
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Name
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Outstanding
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Options
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(#)
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William F. Andrews
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52,002
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Richard L. Crouch
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20,000
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Thomas W. Golonski
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31,000
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Thomas G. Greig
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46,002
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Edward A. Nicholson, Ph.D.
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20,000
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9
EXECUTIVE
COMPENSATION AND OTHER INFORMATION
COMPENSATION
DISCUSSION AND ANALYSIS
Role of
Our Compensation Committee and Our Compensation
Philosophy
Our Compensation Committee evaluates and recommends to our Board
our compensation philosophy and practices and is charged with
administering our compensation program for our named executive
officers: Fred C. Young, our former Chief Executive Officer; R.
Terry Blakemore, our President and Chief Executive Officer;
Michael McAndrew, our Vice President, Chief Financial Officer,
Treasurer and Secretary; and Francis W. Wertheimber, our Senior
Vice President. Mr. Young resigned as an officer and
director of the Company on May 20, 2007 and, when this
Compensation Discussion and Analysis refers to the named
executive officers, such reference does not include
Mr. Young.
Our Compensation Committee believes that the total executive
compensation package paid to our named executive officers should
be designed to pay-for-performance by facilitating the
achievement of our short- and long-range goals, recognizing
individual executive performance and contributions and promoting
increased value creation for our stockholders.
Objectives
of Our Compensation Program
In line with our philosophy, our Compensation Committee has
developed the following objectives for our compensation program
which are to:
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hire, train, develop, compensate and retain high quality
executives for our success
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link a significant portion of an executives pay to the
performance of the organization through the use of at-risk
performance-based compensation
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Our compensation program rewards our named executive officers
and other key employees for:
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outstanding contributions to the achievement of our goals and
overall success, particularly growth in stock price, annual
profits and cash flow
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successful completion of acquisitions of targeted companies and
their integration into the Company
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Components
of Our Executive Compensation Program
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base salary
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annual cash bonus
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long-term incentive (historically, in the form of stock options)
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In designing our compensation program, our Compensation
Committee, in line with our pay-for-performance philosophy, has
historically placed emphasis upon at-risk, variable compensation
in the form of annual cash bonuses
and/or
grants of stock options. Our Compensation Committees and
Boards philosophy has been to approve below-market base
salaries and slightly above-market incentive compensation for
our named executive officers even though we have not provided
executives with a long-term incentive grant in recent years.
Throughout Fiscal 2008 and the first quarter of the fiscal year
ending March 31, 2009 (Fiscal 2009), our
Compensation Committee extensively re-evaluated the nature and
structure of our executive compensation program and the relative
mix of cash and equity incentives to be awarded to our named
executive officers and other key employees, which is described
in Description of Compensation Practices
and Policies for Fiscal 2009. In connection with this
evaluation, the Compensation Committee retained the services of
outside compensation consultants to assist with a review of peer
and broad market executive compensation data and to help us
determine how our executive compensation program, given our
philosophy and culture, should be structured to achieve our
objectives.
Overview
of Annual Setting of Executive Compensation
Our practices are for the Chief Executive Officer to meet with
our Compensation Committee and make recommendations to the
committee regarding each element of compensation to be paid to
our named executive
10
officers (other than our Chief Executive Officer) and other key
employees. The CEOs recommendations are based upon the
individuals performance in the prior fiscal year, the
individuals experience, the requirements of the position
and the individuals relative ability to impact our overall
success. Our Compensation Committee considers our Chief
Executive Officers recommendations and further uses the
committee members collective knowledge of industry and
market pay practices of similarly-situated executives as well as
our overall compensation philosophy in connection with approving
each component of compensation paid to our named executive
officers and other key employees. Our Compensation Committee
then submits its recommendations to our Board for review and
approval. In the case of our Chief Executive Officer, our
Compensation Committee reviews the Chief Executive
Officers performance in the prior fiscal year, experience
and impact on our overall success, and uses the committee
members collective knowledge of industry and market pay
practices regarding chief executive officer compensation and
makes recommendations regarding each element of his compensation
to our Board for review, discussion and approval.
We do not have a policy of reducing awards based upon the
amounts realized from prior compensation. The Compensation
Committee believes that the intended value of an award on its
grant date reflects both the possible upside and the possible
downside of any such award. Likewise, we do not have a policy of
increasing awards based upon amounts not realized from prior
compensation awards.
In Fiscal 2008, our Compensation Committee sought the advice of
outside compensation consultants to assist it with collecting
and reviewing information regarding the executive compensation
programs of a selected group of peer companies (which are listed
below) and to provide it with more general survey data regarding
executive compensation practices for Fiscal 2009 and beyond. The
role of the outside compensation consultants in our executive
compensation processes and procedures is described under
Board of Directors and Certain Board
Committees Compensation Committee.
Summary
of Fiscal 2008 Executive Compensation Decisions
The following is a summary of significant compensation decisions
that were made in Fiscal 2008.
Base
Salary
In Fiscal 2008, Mr. Blakemore was the only named executive
officer to receive an increase in his base salary in connection
with his selection as our President and Chief Executive Officer
and in light of his performance and greater job responsibilities
as a result of our growth. Our Compensation Committee and Board
in Fiscal 2008 approved an increase to Mr. Blakemores
salary to $500,000 after taking into account the following
factors: Mr. Blakemores background and history in the
industry and the Company, the Companys existing
compensation plans and programs, including the Fiscal 2008
executive bonus plan in which Mr. Blakemore is a
participant, a survey prepared by a consultant engaged by the
Compensation Committee, including the peer group results and
compensation mix, the former CEOs compensation history,
Mr. Blakemores compensation history with the Company,
the compensation of the Companys executive team, the
Boards CEO search process, the appropriateness and size of
any bonus that might be given to Mr. Blakemore in
connection with his appointment, Mr. Blakemores total
compensation and internal pay equity. No particular weight was
given to any of these factors. The peer group of companies
utilized for this comparison was:
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Acxiom Corporation
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Gartner Inc.
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ADC Telecommunications Inc.
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Genlyte Group Inc.
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Ametek Inc.
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ManTech International Corp.
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Amphenol Corp.
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Mettler-Toledo International, Inc.
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Anixter International Inc.
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Perot Systems Corp.
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AVX Corp.
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Roper Industries Inc.
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Belden, Inc.
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ScanSource, Inc.
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Commscope, Inc.
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Tektronix Inc.
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Dycom Industries Inc.
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Thomas & Betts Corp.
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EnerSys Inc.
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For information regarding the Fiscal 2008 base salaries of our
named executive officers, see the Summary Compensation
Table in this proxy statement.
11
Bonuses
In May 2007, our Compensation Committee approved an executive
incentive bonus plan for Fiscal 2008 under which a bonus pool
was created based on reported operating earnings per
share1(
of $3.30. Payout of the bonus pool was based upon days sales
outstanding (DSOs) at fiscal year end with, on the
low end, 75% of the pool payable upon the achievement of
approximately 90% of the DSOs target of 71 days (including
Costs/estimated earnings in excess of billings on
uncompleted contracts and Billings in excess of
costs/estimated earnings on uncompleted contracts as
reflected on our balance sheet at March 31, 2008) and,
on the high end, 100% payout of the pool upon the achievement of
the DSOs target of 65 days. Messrs. Blakemore,
Wertheimber and McAndrew were participants in this plan along
with eleven (11) other key employees.
During Fiscal 2008, we reported operating earnings per share of
$3.202(.
In the first quarter of Fiscal 2009, our Compensation Committee
met with management to determine whether any pay-outs would be
made under the plan. Management noted that our effective tax
rate during Fiscal 2008 had been adversely impacted by
approximately 1.9%, or $0.10 of operating earnings per share, as
a result of the exercise and forfeiture of certain stock
options. Our Compensation Committee determined, after adjusting
for this impact, that the operating earnings per share target
under the plan of $3.30 had been met with an accrual for payout
of $600,000. This aggregate bonus pool was arrived at from a
payout of $800,000 at 75% under the terms of the plan due to the
Company achieving DSOs of 70 days at March 31, 2008.
Under the terms of the program, each named executive officer and
each other participant in the program received a payout of
$43,000.
Additionally, our Compensation Committee and Board approved a
discretionary bonus of $75,000 to Mr. Blakemore in
connection with his agreement to serve as the Interim President
and Chief Executive Officer of the Company and an additional
discretionary bonus of $75,000 to Mr. Blakemore in
connection with his agreement to serve as the President and
Chief Executive Officer of the Company after conducting a review
of compensation paid to similarly-situated executives at the
Companys peers and evaluating other considerations more
fully described above in connection with the determination of
Mr. Blakemores base salary.
Long-Term
Compensation Stock Options
In Fiscal 2008, as a result of the Companys ongoing review
of its historical stock option granting practices as described
below in Historical Equity Grant Practices
and New Grant Policy and the above-mentioned
re-evaluation of the nature and structure of our executive
compensation program and the relative mix of cash and equity
incentives to be awarded to our named executive officers and
other key employees, our Compensation Committee did not make any
new grants of stock options to our named executive officers,
although Mr. Blakemore received stock options identical to
and in exchange for cancelled stock options in order to
remediate the adverse tax consequences of Section 409A
(Section 409A) of the Code as described in the
Grants of Plan-Based Awards Fiscal
2008 table of this proxy statement.
Subsequent to Fiscal 2008, however, our Compensation Committee
and Board determined to make grants of stock options to our
named executive officers and other key employees to compensate
them for their efforts over the preceding two-year period during
which no long-term incentive compensation had been provided. In
determining the number of stock options to grant to our named
executive officers, our Compensation Committee, as it had
historically done, took into consideration individual
performance, the individuals contribution to our financial
performance for the fiscal year, the historical number of stock
options granted for such position, the shares available for
grant under the Employee Plan, and the Black-Scholes value of
such options. Based on such considerations, in May 2008, our
Compensation Committee and Board approved stock option grants to
our named executive officers
1
Operating earnings per share is defined by the Company as net
income plus reconciling items (after-tax) and divided by
weighted average shares of Common Stock outstanding (diluted).
Reconciling items include restructuring charges, amortization of
intangible assets on acquisitions, stock-based compensation
expense, asset
write-up
depreciation expense on acquisitions, historical stock option
granting practices investigation costs, the change in fair value
of the interest rate swap and Section 409A expenses.
2
Operating earnings per share of $3.20 was computed as Net income
of $39,233,000 plus reconciling items (after-tax) of $17,222,000
and divided by weighted average common shares outstanding
(diluted) of 17,653,000 shares.
12
as follows: R. Terry Blakemore option to purchase
75,000 shares of Common Stock; Michael McAndrew
option to purchase 50,000 shares of Common Stock; and
Francis W. Wertheimber option to purchase
50,000 shares of Common Stock. Our Compensation Committee
also discussed the timing of these stock option grants and
determined that the grant date should be after the
Companys earnings release regarding its Fiscal 2008
financial results. Accordingly, all such stock options were
granted on May 27, 2008 with an exercise price of $28.71,
the fair market value of the Common Stock on the grant date.
While the Compensation Committee encourages executives to
maintain equity ownership in the Company, it does not currently
have a formal stock ownership policy. The Company is currently
in the process of evaluating a formal stock ownership policy for
consideration in Fiscal 2009.
Historical
Equity Grant Practices and New Grant Policy
As previously disclosed, in November 2006, we received a letter
of informal inquiry from the Enforcement Division of the SEC
relating to our stock option practices. As a result, our Audit
Committee, with the assistance of outside legal counsel,
commenced an independent review of our historical stock option
grant practices and related accounting for stock option grants.
In connection with the foregoing, in Fiscal 2008, our Audit
Committee recommended to our Board, and our Board approved,
procedural enhancements that address the issues raised by the
Audit Committees findings including:
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All stock option grants to employees must be approved by the
Compensation Committee and Compensation Committee approval of
executive officer grants will only occur after such grants are
reviewed by all non-employee directors.
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Compensation Committee actions must specify individual stock
option grant recipients and grant amounts, vesting schedule,
option term, grant date and exercise price based on the fair
market value of the Companys common stock on the grant
date, which will not be earlier than the date of the
Compensation Committee approval action.
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All stock option grants will be awarded at regularly-scheduled
meetings of the Compensation Committee, except in extraordinary
circumstances.
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In addition, the authority of the Compensation Committee
contained in its charter to delegate to the Chief Executive
Officer the authority to make stock option grants to
non-executive officers was removed.
Impact of
Section 409A
Section 409A generally provides that amounts deferred under
nonqualified deferred compensation arrangements will be subject
to accelerated income recognition, interest and substantial
penalties unless the arrangement satisfies certain design and
operational requirements. Final regulations for
Section 409A were issued in April 2007, and the transition
period for amending plans and agreements to comply with
Section 409A ends on December 31, 2008.
In connection with the adoption of Section 409A and related
regulations, we are in the process of reviewing any compensation
arrangements that may implicate Section 409A. Any
amendments that we might make to compensation arrangements to
comply with Section 409A will not be intended to increase
the benefits payable under our plans and arrangements.
In Fiscal 2008, Mr. Blakemore received stock options for
10,000 shares and 50,000 shares that were identical to
and in exchange for cancelled stock options for the same amount
of shares in order to remediate the adverse tax consequences of
Section 409A. The offer to Mr. Blakemore was, in
substance, identical to the terms of an offer to amend or
replace other Company stock options that was made to certain
employees and which closed in December 2007.
Description
of Compensation Practices and Policies for Fiscal 2009
As noted above, throughout Fiscal 2008 and the first quarter of
Fiscal 2009, our Compensation Committee extensively re-evaluated
the nature and structure of our executive compensation program
and the relative mix of cash and equity incentives to be awarded
to our named executive officers and other key employees. In
connection
13
with this evaluation, the Compensation Committee retained the
services of outside compensation consultants to assist with a
review of peer and broad market executive compensation data and
to help us determine how our executive compensation program,
given our philosophy and culture, should be structured to
achieve our objectives.
In making Fiscal 2009 compensation decisions relating to our
named executive officers, our Compensation Committee considered
our executive compensation philosophy of paying below-market
base salaries and slightly above-market incentive compensation.
Our Compensation Committee discussed with our Chief Executive
Officer proposals relating to the compensation of our named
executive officers (other than the Chief Executive Officer). The
Compensation Committee also reviewed peer group and survey data
relating to these positions to develop overall compensatory
arrangements for these executives. After discussions with our
Chief Executive Officer and the outside compensation
consultants, the committee approved, subject to Board approval,
the Fiscal 2009 total direct compensation of the named executive
officers, other than for our Chief Executive Officer, and, in
the case of our Chief Executive Officer, after review of peer
group and survey data with the compensation consultant in the
absence of our Chief Executive Officer, the committee approved
the Fiscal 2009 total direct compensation of our Chief Executive
Officer. The incentive compensation of the named executive
officers (annual cash bonus and long-term incentive
compensation) described below, combined with Fiscal 2009 base
salaries, provide for compensation opportunity for each
executive above median as compared to similarly situated
executives as reflected in the data provided by the consultants.
The list of peer companies which appears below was developed,
after discussions among our Compensation Committee, the
consultants and management, for use, along with survey data to
assess whether each of the named executive officers
compensation (base salary, annual bonus, and long-term incentive
compensation), as well as their total compensation, was
competitive relative to similarly-situated executives. The peer
group utilized for these purposes was composed of the following
companies:
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Acxiom Corporation
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Gartner Inc.
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ADC Telecommunications Inc.
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GTSI Corp.
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Arris Group Inc.
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ManTech International Corp.
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Belden, Inc.
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MasTec, Inc.
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Brocade Communications Systems, Inc.
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MAXIMUS Inc.
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CIBER, Inc.
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Novell Inc.
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Ciena Corp.
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Nu Horizons Electronics Corp.
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Commscope Inc.
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Plantronics Inc.
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Cincinnati Bell Inc.
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Polycom, Inc.
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Dycom Industries Inc.
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SAVVIS Inc.
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These companies were selected because of similarity in industry,
size in terms of revenues and performance to the Company. The
outside compensation consultants also presented our Compensation
Committee with survey data, which was based on
executive-position match, as another means by which the
committee could asses and judge the compensation paid to our
named executive officers.
Base Salaries. Consistent with our philosophy,
our Compensation Committee and Board approved base salaries for
our named executive officers, except for our Senior Vice
President, which were approximately 10% to 15% below the median
base salaries of similarly-situated executives as reflected in
the data provided by the consultant. Due to the unique nature of
the position of the Senior Vice President, including his status
as a local national in Japan, the appropriate base salary for
the Senior Vice President was determined by the Committee using
its discretion and based on such factors as the
individuals contributions, responsibilities, experience,
unique skillset and salary history. The Fiscal 2009 base
salaries of the named executive officers are $550,000 for the
Chief Executive Officer, an increase from $500,000, $315,000 for
the Chief Financial Officer, an increase from $250,000, and
$265,000 for the Senior Vice President, an increase from
$250,000.
Annual Cash Bonus Program. In May 2008, the
Board approved an annual incentive bonus plan (the Annual
Incentive Plan) for Fiscal 2009. The main objective of the
Annual Incentive Plan is to motivate our named executive
officers to achieve the Companys overall operating plan.
The performance goals for the Annual Incentive Plan are
operating earnings per share, adjusted operating income as a
percentage of total revenues, adjusted EBITDA (Adjusted
EBITDA) (as determined consistent with the Companys
press release dated May 22, 2008 filed as an exhibit to the
Companys Current Report on
Form 8-K
for the event dated May 22, 2008) and DSOs. The
14
performance goals will be equally weighted. Under the Annual
Incentive Plan, the achievement of the performance goals at
approximately 90% of target will result in a payout of 50% of
targeted annual bonus, the achievement of the performance goals
at 100% of target will result in a payout of 100% of targeted
annual bonus and the achievement of the performance goals at
approximately 110% of target will result in a payout of 150% of
targeted annual bonus. These performance goals are likely to be
achieved at 90% of target, are challenging but achievable at
100% of target but require successful implementation of our
mergers & acquisitions program and are remotely
achievable at 110% of target.
Following Board review and approval, our Compensation Committee
approved targeted annual bonus award levels under the Fiscal
2009 Annual Incentive Plan to the Companys executive
officers as follows: our Chief Executive Officer
100% of base salary or $550,000; our Chief Financial
Officer 80% of base salary or $252,000; and our
Senior Vice President 50% of base salary or $132,500.
Long-Term Incentive Program. As part of its
engagement, our outside compensation consultants discussed the
Companys historical compensation practices with key
employees, including the named executive officers, and with
certain members of the Board. In meetings with the outside
compensation consultants during Fiscal 2008 and in the first
quarter of Fiscal 2009, our Compensation Committee and
management were advised that our historical emphasis on stock
options as the sole long-term compensation vehicle had not
achieved the desired objectives and had created a mismatch
between the perceived and real value of the option program and
the accounting expense associated with the program. The
consultants further noted that the significant reliance on stock
options had resulted in a total rewards program that was below
market with grant practices which had been historically
inconsistent. Further, the consultants noted that there was a
view, based on their interviews of our personnel, that the value
of stock options is subject to external forces beyond the
control of employees even when we perform well financially. The
outside compensation consultant also discussed market trends in
long-term compensation mix, including the use of multiple
long-term incentive vehicles in the long-term incentive
compensation program, and provided our Compensation Committee
with an overview of prevalent vehicles.
Based on the limitations of our existing Employee Plan as the
only current stockholder-approved long-term compensation plan
for our executive officers, the compensation consultant
recommended, and the Compensation Committee agreed, that the
transition of the Companys new long-term incentive program
utilizing other compensation vehicles to supplement the use of
stock options should occur over a two-year period. In Fiscal
2009, the long-term incentive program would necessarily use
stock options as the only equity-based compensation vehicle as
other vehicles (other than stock appreciation rights) were not
available under the Employee Plan. In such discussion, it was
contemplated that other long-term incentive compensation
vehicles could be utilized in future years, subject to
stockholder approval of a plan providing for such compensation
vehicles, such as the Incentive Plan which will be presented for
stockholder consideration at the Annual Meeting.
Accordingly, after discussions among our Compensation Committee,
management and the outside compensation consultants, the
Compensation Committee and Board approved a new Long-Term
Incentive Plan (the LTIP) for the two fiscal years
ending March 31, 2010. The LTIP is comprised of a cash
performance award representing 60% of the award and a stock
option grant representing 40% of the award, which design
reflected our Compensation Committees view that we need to
use more than one type of long-term incentive vehicle. The cash
performance award will be earned based on the Companys
cumulative Adjusted EBITDA for the two fiscal years ending
March 31, 2010, and will be paid out at 50% of the targeted
cash award based on achievement of 75% of the Adjusted EBITDA
target, 100% of the targeted cash award based on achievement of
100% of the Adjusted EBITDA target; and 150% of the targeted
cash award based on achievement of 120% of the Adjusted EBITDA
target. These performance goals are likely to be achieved at 90%
of target, are challenging but achievable at 100% of target but
require successful implementation of our mergers &
acquisitions program and are remotely achievable at 110% of
target. The Committee believes that Adjusted EBITDA, an
important measure for evaluating the profitability of the
Company, and stock price appreciation, a requirement for success
under our stock option awards, appropriately link our
executives long-term compensation programs with the
creation of stockholder value.
Following Board review and approval, the Committee made the
following awards under the LTIP to the Companys executive
officers: our Chief Executive Officer a targeted
cash award of $1,200,000 and a stock option grant for
80,000 shares of Common Stock, with an exercise price of
$28.93 per share; our Chief Financial Officer
15
a targeted cash award of $300,000 and a stock option grant for
20,000 shares of Common Stock with an exercise price of
$28.93 per share; and our Senior Vice President a
targeted cash award of $150,000 and a stock option grant for
10,000 shares of Common Stock with an exercise price of
$28.93 per share. The stock options granted pursuant to the LTIP
will vest over a three-year period.
Long-Term Incentive Program for Fiscal Years After Fiscal
2009. We are submitting for stockholder approval
the Incentive Plan which is described under
Proposal 2 Approval of the 2008
Long-Term Incentive Plan. Unlike the Employee Plan,
the Incentive Plan would provide for a variety of equity awards
and cash awards that could have tax advantages to the Company,
in addition to stock options. Our Compensation Committee and
Board are seeking stockholder approval of the Incentive Plan so
that our Compensation Committee, in consultation with the
outside compensation consultants, may choose from equity
incentive awards which most appropriately fit with our
compensation philosophy, achieve our corporate objectives with
the executive compensation program, provide awards that are
competitive to attract and retain executive talent relative to
our peers, align our compensation practices with market trends
and provide tax efficiencies.
Retirement
Benefits
We generally do not have a Company-funded post-retirement
medical benefits program or a defined benefit pension program
for our key employees. Mr. Blakemore participates in the
Retirement and Security Program of the National
Telecommunications Cooperative Association (the NTCA
Plan), a multiple employer pension plan in which the
subsidiary of the Company that employs Mr. Blakemore
participates as a contributing employer. Mr. Blakemore
participated in such plan at the time of the Companys
acquisition of this subsidiary in 1999. Mr. Wertheimber is
a citizen of Japan and, under Japanese law, must enroll in
Japans national pension system to which we make
contributions. Mr. McAndrew participates in a defined
contribution plan similar to most Company employees.
Perquisites
The Company does not provide any perquisites to executives who
reside in the United States. The Company does provide an
automobile benefit to the Senior Vice President who is a local
national in Japan, which is a customary practice in that country.
Change-in-Control
and Employment Termination Arrangements
We entered into agreements with Mr. Wertheimber in November
2004 and with Messrs. McAndrew and Blakemore in May 2007.
The agreements with Messrs. Wertheimber, McAndrew and
Blakemore generally provide for certain benefits to these named
executive officers in the event that their respective employment
is terminated within two (2) years of a change of control
either by (i) us for a reason other than cause, death,
disability or retirement or (ii) the named executive
officers resignation for good reason.
In October 2007, our Board approved a revised compensatory
arrangement for Mr. Blakemore in connection with his
selection to the positions of President and Chief Executive
Officer. See Summary of Fiscal 2008
Executive Compensation Decisions Base
Salary above for a discussion of the considerations
regarding these compensation arrangements for
Mr. Blakemore. After discussion, the Compensation Committee
and the Board determined to amend Mr. Blakemores
agreement to provide that severance would be due to
Mr. Blakemore upon termination of employment by us (other
than due to death, disability, retirement or for cause) or by
Mr. Blakemore for good reason, in each case prior to a
change in control of the Company. Our Compensation and Board
approved this amendment to our Chief Executive Officers
agreement as an inducement for him to accept the positions of
President and Chief Executive Officer with us.
Our Compensation Committee and our Board approved these
agreements and
change-in-control
and employment termination provisions in our compensation
arrangements to reduce the distraction regarding the impact of
such a transaction on the personal situation of a named
executive officer and to provide incentives to them to remain
with us through the consummation of a
change-in-control
transaction, if any. The level of severance provided,
16
should the executive be terminated prior to or within two years
following a
change-in-control,
aligns with the level commonly provided in the market.
For a more detailed description of the change in control
arrangements with our named executive officers, see
Potential Payments Upon Termination or
Change-in-Control.
Report of
the Compensation Committee
The Compensation Committee reviewed and discussed with
management the Compensation Discussion and Analysis set
forth in this proxy statement. Based on the foregoing review and
discussions, the Compensation Committee recommended to our Board
that the Compensation Discussion and Analysis be included
in this proxy statement.
The information contained in this report does not constitute
soliciting material and should not be deemed filed or
incorporated by reference into any other Company filing under
the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent the
Company specifically incorporates it by reference into such
filing.
Compensation Committee:
Thomas W. Golonski, Chairman
Richard L. Crouch
Thomas G. Greig
17
SUMMARY
COMPENSATION TABLE FISCAL 2008 and FISCAL
2007
The following table sets forth cash compensation paid by us and
our subsidiaries, as well as other compensation paid or accrued
during Fiscal 2008 and the fiscal year ended March 31, 2007
(Fiscal 2007) to (i) Fred C. Young, our
principal executive officer until his resignation on
May 20, 2007, (ii) R. Terry Blakemore, who was
appointed our Interim President and Chief Executive Officer on
May 21, 2007 following Mr. Youngs resignation
and subsequently was named our President and Chief Executive
Officer on October 13, 2007, (iii) our principal
financial officer, Michael McAndrew and (iv) Francis W.
Wertheimber, an executive officer at the end of Fiscal 2008 who
received total compensation (determined in accordance with SEC
rules) in Fiscal 2008 that exceeded $100,000 (each, a
Named Executive Officer). Such compensation was paid
for services rendered in all capacities to us and our
subsidiaries:
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Name and Principal Position
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Year
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Salary
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Bonus
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Option
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Non-Equity
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Change in
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All Other
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Total
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($)
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($)
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Awards(1)
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Incentive
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Pension
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Compensation
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($)
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($)
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Plan
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Value and
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($)
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Compensation
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Nonqualified
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($)
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Deferred
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Compensation
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Earnings
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($)
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Fred C. Young,
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2008
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103,846
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592
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(2)
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104,438
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Chief Executive
Officer
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2007
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481,437
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1,535,561
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5,826
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(2)
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2,022,824
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R. Terry Blakemore,
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2008
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367,307
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150,000
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(3)
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38,231
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43,000
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221,938
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(4)
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29,473
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(5)
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849,949
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President and
Chief Executive
Officer
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2007
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186,058
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351,482
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100,000
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152,746
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(4)
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13,282
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(5)
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803,568
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Michael McAndrew,
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2008
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250,000
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145,120
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43,000
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56,470
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(6)
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494,590
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Vice President,
Chief Financial
Officer, Treasurer
and Secretary
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2007
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164,959
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286,697
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4,663
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(2)
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456,319
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Francis W. Wertheimber,
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2008
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295,030
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(7)
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108,341
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43,000
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32,287
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(7)(8)
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478,658
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Senior Vice President
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2007
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217,759
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(7)
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100,000
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299,801
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59,509
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(7)(8)
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677,069
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(1)
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Reflects the dollar amount recognized for financial statement
reporting purposes in accordance with SFAS 123(R), and,
thus, includes amounts from awards granted in and prior to the
year referenced. For Fiscal 2008, the weighted-average
assumptions underlying the valuation of the stock options under
the Black-Scholes option pricing model are as follows: expected
life of 5.24 years; volatility of 52.59%; a risk-free
interest rate of 4.20%; and a dividend yield of 0.6%. For Fiscal
2007, see Note 14 of the Notes to the Consolidated
Financial Statements in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007 (the 2007
Form 10-K)
regarding weighted-average assumptions underlying the valuation
of stock options granted in Fiscal 2007 and the fiscal years
ended March 31, 2006 and 2005. |
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(2)
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Represents amounts paid by us for the individual under a 401(k)
plan and payments for life insurance premiums. |
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(3)
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Mr. Blakemore received a $75,000 bonus when he agreed to
serve as Interim President and Chief Executive Officer and
received an additional $75,000 bonus when he agreed to become
the Companys President and Chief Executive Officer. |
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(4)
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Mr. Blakemore participates in the NTCA Plan. One of our
subsidiaries is a member of the National Telecommunications
Cooperative Association, which sponsors the NTCA Plan, a
multiple employer pension plan in which such subsidiary
participates as a contributing employer. The amount in this
column for Fiscal 2008 represents the aggregate change in
actuarial present value of his accumulated benefits under the
NTCA Plan from December 31, 2006 to December 31, 2007
(the last day of the NTCA Plans most-recently completed
fiscal year) and the amount in this column for Fiscal 2007
represents the aggregate |
18
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change in actuarial present value of his accumulated benefits
under the NTCA Plan from December 31, 2005 to
December 31, 2006. For more information regarding the NTCA
Plan and the assumptions used to calculate this amount, see the
Pension Benefits Table and
Understanding Our Pension Benefits Table in
this proxy statement. |
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(5)
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Represents the Companys contributions to the NTCA Plan
($28,665 in Fiscal 2008) and payments for life insurance
premiums. |
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(6)
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Represents amounts paid by us for the individual under a 401(k)
plan and payments for life insurance premiums. Also includes
$51,343 representing a payment to Mr. McAndrew to reimburse
him (including a tax
gross-up)
for the adverse tax effects of Section 409A with regard to
one stock option exercised by him in Fiscal 2008. |
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(7)
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Represents amounts paid in Japanese yen and converted to U.S.
dollars using an exchange rate as of March 31, 2008 of
.010031 U.S. dollars for each Japanese yen for Fiscal 2008 and
an exchange rate as of March 31, 2007 of .008486 U.S.
dollars for each Japanese yen for Fiscal 2007. |
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(8)
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Mr. Wertheimber is a resident of Japan and, under Japanese
law, must enroll in Japans national pension system to
which we make contributions. For Fiscal 2008, we contributed to
this pension system on his behalf. We also provided him with a
vehicle allowance and paid certain other vehicle-related
expenses totaling $25,458 for Fiscal 2008. |
GRANTS OF
PLAN-BASED AWARDS FISCAL 2008
The following table sets forth each grant of awards made to our
Named Executive Officers in Fiscal 2008 under plans established
by us:
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Name
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Grant Date
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All Other Option
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Exercise or
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Awards:
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Base Price of
|
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Number of
|
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Option
|
|
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|
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Securities
|
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Awards
|
|
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|
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Underlying
|
|
|
($/Sh)
|
|
|
|
|
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|
Options(1)
|
|
|
|
|
|
|
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(#)
|
|
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|
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|
|
|
|
|
|
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|
|
Fred C. Young
|
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R. Terry Blakemore
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03/06/2008
|
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60,000(2)
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39.77
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Michael McAndrew
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08/07/2007
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20,000(3)
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42.93
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|
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|
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Francis W. Wertheimber
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(1)
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Our Board and our stockholders have adopted the Employee Plan
and have authorized the issuance of stock 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). Stock 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 our Compensation Committee). |
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(2)
|
|
On March 6, 2008, Mr. Blakemore received stock options
for 10,000 shares and 50,000 shares that were
identical to and in exchange for cancelled options for the same
amount of shares in order to remediate the adverse tax
consequences of Section 409A associated with such options.
The new options provided no additional benefit to
Mr. Blakemore as compared to the cancelled options. In
accordance with SFAS 123(R), the Company did not incur any
incremental compensation expense as a result of this
cancellation and regrant. |
19
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(3)
|
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This reflects Mr. McAndrews previously-disclosed
agreement to voluntarily increase the price of an outstanding
stock option from $40.55 to $42.93. The fair market value of the
Common Stock on the date of the repricing was $39.43. In
accordance with SFAS 123(R), the Company did not incur any
incremental compensation expense as a result of this repricing. |
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END FISCAL
2008
The following table sets forth all unexercised stock options
which have been awarded by us to our Named Executive Officers
and are outstanding as of March 31, 2008:
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Option Awards
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Name
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Number of Securities
|
|
|
Number of Securities
|
|
|
Option
|
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|
Option
|
|
|
|
Underlying
|
|
|
Underlying
|
|
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Exercise Price
|
|
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Expiration
|
|
|
|
Unexercised Options
|
|
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Unexercised Options
|
|
|
($)
|
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Date
|
|
|
|
(#)
|
|
|
(#)
|
|
|
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Exercisable
|
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Unexercisable
|
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|
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|
Fred C. Young
|
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R. Terry Blakemore
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6,667
|
|
|
|
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34.2900
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|
08/11/2014
|
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60,000
|
|
|
|
|
|
|
39.7700
|
|
|
10/31/2015
|
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|
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|
|
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Michael McAndrew
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7,500
|
|
|
|
|
|
|
45.0625
|
|
|
08/30/2009
|
|
|
|
8,552
|
|
|
|
|
|
|
42.2500
|
|
|
10/11/2010
|
|
|
|
15,000
|
|
|
|
|
|
|
41.4500
|
|
|
09/21/2011
|
|
|
|
20,000
|
|
|
|
|
|
|
42.9300
|
|
|
10/01/2013
|
|
|
|
50,000
|
|
|
|
|
|
|
39.7700
|
|
|
10/31/2015
|
|
|
|
3,333
|
|
|
|
6,667(1)
|
|
|
38.9650
|
|
|
06/15/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis W. Wertheimber
|
|
|
25,000
|
|
|
|
|
|
|
45.0625
|
|
|
08/30/2009
|
|
|
|
21,772
|
|
|
|
|
|
|
42.2500
|
|
|
10/11/2010
|
|
|
|
25,000
|
|
|
|
|
|
|
41.4500
|
|
|
09/21/2011
|
|
|
|
25,000
|
|
|
|
|
|
|
44.3700
|
|
|
11/13/2012
|
|
|
|
5,000
|
|
|
|
|
|
|
44.9100
|
|
|
12/19/2012
|
|
|
|
35,000
|
|
|
|
|
|
|
40.5500
|
|
|
10/01/2013
|
|
|
|
50,000
|
|
|
|
|
|
|
34.2900
|
|
|
08/11/2014
|
|
|
|
50,000
|
|
|
|
|
|
|
39.7700
|
|
|
10/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
These options vest in two (2) remaining annual installments
of 3,333 and 3,334 on June 15, 2008 and June 15, 2009,
respectively. |
20
OPTION
EXERCISES AND STOCK VESTED TABLE FISCAL
2008
The following table sets forth information concerning each
exercise of stock options by our Named Executive Officers during
Fiscal 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
Name
|
|
|
Number of
|
|
|
Value Realized
|
|
|
|
Shares
|
|
|
on Exercise
|
|
|
|
Acquired
|
|
|
($)
|
|
|
|
on Exercise
|
|
|
|
|
|
|
(#)
|
|
|
|
|
|
|
|
|
|
|
Fred C. Young
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Terry Blakemore
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael McAndrew
|
|
|
|
70,000
|
|
|
|
|
691,850
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis W. Wertheimber
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PENSION
BENEFITS TABLE FISCAL 2008
The following table provides information with respect to each
plan that provides for specified retirement payments or
benefits, or payments or benefits that will be provided
primarily following retirement to our Named Executive Officers,
including tax-qualified defined benefit plans and supplemental
employee retirement plans, but excluding defined contribution
plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Plan Name
|
|
|
Number of
|
|
|
Present
|
|
|
Payments
|
|
|
|
|
|
|
Years Credited
|
|
|
Value of
|
|
|
During Last
|
|
|
|
|
|
|
Service
|
|
|
Accumulated Benefit
|
|
|
Fiscal Year
|
|
|
|
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fred C. Young
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Terry Blakemore
|
|
|
NTCA Plan
|
|
|
|
27(1)
|
|
|
|
|
1,462,893
|
(2)
|
|
|
28,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael McAndrew
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis W. Wertheimber
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Mr. Blakemore commenced participation in the NTCA Plan in
October 1985 and was granted service credit back to March 1981.
This additional service credit granted to him only has the
effect of making him retirement eligible, without any benefit
reduction, at an earlier date and does not result in any
augmentation of benefits paid to him. |
|
(2)
|
|
The actuarial present value of Mr. Blakemores
accumulated benefits under the NTCA Plan was computed as of
December 31, 2007 (the last day of the most recently
completed fiscal year of the NTCA Plan). The amount was computed
using the following assumptions and valuation methods:
(i) a retirement age of 55 (the earliest age at which he
could retire without any benefit reduction due to age),
(ii) an annual increase of 2% of compensation,
(iii) the mortality table provided in Internal Revenue
Service Revenue Ruling
2007-67 and
(iv) a discount rate of 7.75%. |
21
UNDERSTANDING
OUR PENSION BENEFITS TABLE
The
Retirement and Security Program of the National
Telecommunications Cooperative Association
The NTCA Plan is a multiple employer pension plan which is the
main pension plan for over 380 employers who are members of the
National Telecommunications Cooperative Association (of which
one of our subsidiaries is a member). The NTCA Plan will pay
retirement benefits to Mr. Blakemore based on his years of
service with us and his compensation. As a qualified plan, the
NTCA Plan is subject to various requirements on coverage,
funding, vesting and the amount of compensation which may be
taken into account in calculating benefits.
Normal Retirement. The normal retirement
benefit under the NTCA Plan is the benefit which will be
received at the normal retirement date, which is the first day
of the month containing Mr. Blakemores
65th birthday. The normal retirement benefit is expressed
as a life annuity with ten (10) years certain.
The normal retirement benefit is the sum of the basic normal
retirement benefit that Mr. Blakemore has accrued on the
basis of active participation and certain other types of
benefits such as fixed benefits, supplemental benefits and
benefit upgrades. The basic normal retirement benefit increases
as Mr. Blakemores average compensation increases and
is based on: (i) High-5 Compensation which
means the average of his
W-2+
Compensation (defined below) for the five (5) years of the
last ten (10) years during which his
W-2+
Compensation was the highest
(W-2+
Compensation means
W-2 wages,
including any bonuses, overtime and commissions, plus pre-tax
401(k) contributions, Section 125 contributions (cafeteria
plan contributions) and Section 457 contributions
(contributions to a non-qualified deferred compensation plan
adopted after 1986 by a tax-exempt employer) and, effective for
plan years beginning after December 31, 2000,
Section 132(f)(4) income (qualified transportation fringe
benefit income), but excluding income attributable to
employer-sponsored group term life insurance over $50,000),
(ii) total accruals, which is generally the sum of certain
contribution percentages (both employer and employee) made on
his behalf plus contribution percentages added through program
upgrades, rollovers and prior service benefits, (iii) the
applicable program actuarial factor and (iv) applicable
uplift multiplier.
Additionally, the maximum annual pension which
Mr. Blakemore accrues may never exceed 100% of his average
W-2+
Compensation (taxable compensation prior to January 1,
1998) for his High-3 (High-3
compensation refers to the average of the highest three
(3) consecutive years of Mr. Blakemores
W-2+
Compensation) years before retirement.
Early Retirement. The NTCA Plan permits early
retirement on or after the first day of the month in which
Mr. Blakemore reaches the age of 55. At age 55,
Mr. Blakemore (assuming continued employment with us) will
be entitled to unreduced retirement benefits at that time
pursuant to the Rule-of-85. The Rule-of-85 allows
certain plan participants to retire early (before the age of 65
but not before age 55) without an actuarial reduction
in their accrued benefits for retiring before age 65. Under
this formula, the sum of a participants age at retirement
and number of years of service must equal or exceed 85 in order
for the participant to be eligible for Rule-of-85
benefits.
Late Retirement. The NTCA Plan permits late
retirement (retirement after the age of 65). If a participant
retires late, the participants retirement benefits
automatically will be increased by one-quarter of one percent
(.25%) for each month the participant delays retirement beyond
age 65. Additionally, if a participant continues working
after his 65th birthday, benefits may increase through
additional accruals and higher High-5 Compensation.
Forms of Payment. The NTCA Plan provides for
the following forms of payment options:
(i) 10-years
certain and life thereafter,
(ii) 5-years
certain and life thereafter, (iii) life only, (iv) if
married, a qualified joint and survivor annuity (with 50% of the
monthly amount payable during the participants lifetime
continued after the participants death to his surviving
spouse for the life of the surviving spouse), (v) if
married, a qualified joint and survivor annuity (with
662/3%
of the monthly amount payable during the participants
lifetime continued after the participants death to his
surviving spouse for the life of the surviving spouse),
(vi) if married, a qualified joint and survivor annuity
(with 100% of the monthly amount payable during the
participants lifetime continued after the
participants death to his surviving spouse for the life of
the surviving spouse), (vii) if married, a qualified joint
and survivor annuity under (iii) (vi) (with the
annuity that is payable guaranteed for 10 years following
retirement
22
and then payable at 50%,
662/3%
or 100% to the spouse (if the participant predeceases the
surviving spouse)), (viii) an annuity under (i)
(vii) that is supplemented by a certain amount between the
time of retirement and either age 62 or normal social
security retirement age, and then actuarially reduced once that
age is reached, (ix) a combination of a partial single sum
and any one of the foregoing annuity options, (x) a
guaranteed annuity option or (xi) a single lump sum.
POTENTIAL
PAYMENTS UPON TERMINATION OR
CHANGE-IN-CONTROL
We do not have employment agreements with our Named Executive
Officers. We entered into an agreement with Fred C. Young in May
2004, with Francis W. Wertheimber in November 2004 and with
Michael McAndrew and R. Terry Blakemore in May 2007, and an
amended and restated agreement with Mr. Blakemore in
October 2007, which agreements provide for certain benefits to
the Named Executive Officers in the event of a qualifying
termination of their employment as described below. The original
term of each of the agreements is five (5) years with an
automatic renewal on a one-year basis thereafter absent notice
of nonrenewal six (6) months prior to the renewal date;
provided, however, that if a
Change-in-Control
(as defined below) occurs during the initial or any renewal
period, the agreement will survive until the second anniversary
(third anniversary in the case of Mr. Young) of the date of
the
Change-in-Control.
Each of the above-mentioned agreements contains a provision
prohibiting the respective Named Executive Officer from
competing with us during his employment with us and for five
(5) years thereafter. Specifically, without our prior
written consent, the Named Executive Officers may not directly
or indirectly engage in, assist or have an active interest in
(whether as proprietor, partner, investor, stockholder, officer,
director or any type of principal whatsoever), or enter the
employ of or act as agent for, or advisor or consultant to, any
person, firm, partnership, association, corporation or business
organization, entity or enterprise which is or is about to
become directly or indirectly engaged in any business that is
competitive with any of our businesses in which the Named
Executive Officer is or was engaged.
Our Named Executive Officers are also bound, during the term of
their agreement and at all times thereafter, by restrictive
covenants with respect to confidential information, as more
fully described in their respective agreements. They are not
permitted, unless authorized in writing by us, to disclose or
cause to be disclosed, such confidential information or to
authorize or permit such disclosure of the confidential
information to any unauthorized third party, or to use the
confidential information (i) for their own benefit or
advantage, (ii) for the benefit or advantage of any third
party or (iii) in any manner which is intended to injure or
cause loss, whether directly or indirectly, to us. At any time
upon our request, and immediately upon termination, the Named
Executive Officers must surrender all written or otherwise
tangible documentation representing such confidential
information to us.
A description of the other material terms of these agreements
and estimates of the payments and benefits which each Named
Executive Officer would receive upon a qualifying termination
are set forth below. The estimates have been calculated assuming
a termination date of March 31, 2008, and are based upon
the closing price of our Common Stock on that date ($30.85). Due
to the number of factors that affect the nature and amount of
any benefits provided upon the events discussed below, such as
the timing during the year of any triggering event and our stock
price, the actual amounts to be paid or distributed may be
different.
Termination
Payments and Benefits Outside of a
Change-in-Control
R. Terry
Blakemore:
If Mr. Blakemores employment with the Company is
terminated (i) due to his death or Disability (as defined
below), (ii) by Mr. Blakemore other than for Good
Reason for Termination (as defined below) or (iii) by us
due to Cause for Termination or in accordance with Retirement
(each as defined below), then, except as otherwise set forth
below, we have no payment obligations to him other than as
provided by our various policies, procedures and practices
generally applicable to all employees.
If, however, Mr. Blakemores employment with the
Company is involuntarily terminated during the term of his
agreement and prior to a
Change-in-Control
(i) by us other than due to his death or Disability or in
accordance with Retirement or (ii) by Mr. Blakemore
for Good Reason for Termination other than at a time when we
could have
23
terminated him due to Cause for Termination (as defined below),
then Mr. Blakemore is entitled to receive a payment equal
to his base salary at the rate in effect on the termination date
for the period equal to the greater of (A) thirty-six
(36) months from the date of his agreement or
(B) twelve (12) months from the termination date. Such
payment is to be made to Mr. Blakemore in the form of a
lump sum, subject to all applicable withholdings, within sixty
(60) days following the termination date; provided,
however, that in order for Mr. Blakemore to terminate
his employment for Good Reason for Termination, (i) he must
deliver a notice of termination to us within ninety
(90) days of the event constituting Good Reason for
Termination, (ii) the event must remain uncorrected for
thirty (30) days following the date on which
Mr. Blakemore gives us notice of his intent to terminate
(the Notice Period) and (iii) the termination
date must occur within sixty (60) days after the expiration
of the Notice Period.
Fred C.
Young:
If Mr. Youngs employment with the Company had been
terminated (i) due to his death or Disability, (ii) by
Mr. Young other than for Good Reason for Termination (as
defined below) or (iii) by the Company due to Cause for
Termination or in accordance with Retirement, then, except as
otherwise set forth below, we would have had no payment
obligations to him other than as provided by our various
policies, procedures and practices generally applicable to all
employees.
If, however, during the term of Mr. Youngs agreement,
and prior to a
Change-in-Control,
his employment had been terminated (i) by us other than due
to Cause for Termination, death, Disability or Retirement or
(ii) upon his resignation if our Board removed or failed to
reelect him to the chief executive officer position or otherwise
reduced the power and status of such position at any time other
than at a time when he could have been terminated due to Cause
for Termination, he would have been entitled to, in addition to
any accrued but unpaid benefits:
|
|
|
|
|
three (3) times the sum of his then current annual base
salary for the year in which the employment termination occurred
|
|
|
three (3) times one third (1/3) of the aggregate cash
bonuses or awards received by him as incentive compensation or
bonus during the three (3) calendar years immediately
preceding the termination date
|
|
|
an amount equal to the total cash award or bonus that would have
been received by him under any long-term incentive plan,
assuming that, in addition to any goals met prior to the
termination date, all goals that were to be measured after such
date were achieved and he remained employed, less any portion of
the cash award or bonus for that award period previously paid to
him
|
|
|
medical insurance and other similar benefits for the period of
three (3) years following the termination date, as if he
remained in our continuous employ during such period
|
|
|
unvested options would have vested and remained outstanding in
accordance with their respective terms
|
The above-described payments would have been required to be made
to Mr. Young on or before the sixtieth (60th) day following
the termination date.
Mr. Youngs agreement further provided that in the
event his employment had been terminated due to his death, or
termination occurred on or after May 11, 2007 by his
resignation at any time other than at a time when he could have
been terminated due to Cause for Termination, all of his
unvested stock options would have vested and all of his stock
options would have remained outstanding in accordance with their
respective terms until their stated expiration date.
Named
Executive Officers other than Messrs. Blakemore and
Young:
The agreements with Messrs. McAndrew and Wertheimber do not
provide for any benefits outside of a
change-in-control
context. If their respective employment is terminated due to
death or Disability or by them or by us at any time prior to a
Change-in-Control,
then we have no payment obligations to them other than as
provided by our various policies, procedures and practices
generally applicable to all employees.
24
Certain
Definitions:
The following definitions are contained in the agreements with
Messrs. Young, Blakemore, McAndrew and Wertheimber:
Cause for Termination: Named Executive Officers
deliberate and intentional failure to devote his best efforts to
the performance of duties, gross misconduct materially and
demonstrably injurious to us, conviction of criminal fraud,
embezzlement against us or a felony involving moral turpitude,
continuing failure after notice to adhere to the nondisclosure
and noncompete portions of the agreements (described above) or
willful failure to follow instructions of our Board. For
purposes of this definition, no act, or failure to act, on the
Named Executive Officers part shall be considered
deliberate and intentional or to constitute gross
misconduct unless done, or omitted to be done, by the Named
Executive Officer not in good faith and without reasonable
belief that the Named Executive Officers action or
omission was in the best interests of the Company.
Change-in-Control: a change in control of the Company is
deemed to occur if:
|
|
|
|
i.
|
it is reportable as such by SEC rules;
|
|
ii.
|
twenty percent (20%) or more of the combined voting power of our
then-outstanding capital stock is acquired, coupled with or
followed by a change in a majority of the members of our
Board; or
|
|
|
|
|
iii.
|
we sell all or substantially all of our assets or merge,
consolidate or reorganize with another company and (x) upon
conclusion of the transaction less than fifty-one percent (51%)
of the outstanding securities entitled to vote in the election
of directors of the acquiring company or resulting company are
owned by the persons who were our stockholders prior to the
transaction, and following the transaction there is a change in
a majority of the members of our Board or (y) following the
transaction, a person or group would be the owner of twenty
percent (20%) or more of the combined voting power of the
acquiring company or resulting company, and there is a change in
a majority of the members of our Board.
|
Disability: incapacity due to physical or mental illness
or injury which causes a Named Executive Officer to be unable to
perform his duties to us during ninety (90) consecutive
days or one hundred twenty (120) days during any six
(6) month period.
Good Reason for Termination (with respect to
Mr. Blakemore): a material negative change in
Mr. Blakemores service relationship with us and any
Affiliate of ours, taken as a whole, without his consent, on
account of one or more of the following conditions: (i) a
material diminution in his base compensation; (ii) a
material diminution in his authority, duties or
responsibilities; or (iii) after a
Change-in-Control
has occurred, a change in the geographic location at which
Mr. Blakemore must report to and perform the majority of
his services of more than fifty (50) miles. For purposes of
Mr. Blakemores agreement, Affiliate
means, with respect to any person or legal entity, any other
person or legal entity controlling, controlled by or under
common control with such person or legal entity.
Good Reason for Termination (other than with respect to
Mr. Blakemore): our failure to have any successor
assume the agreement or the occurrence of any of the following
after a
Change-in-Control:
(i) the assignment of new duties materially and
substantially inconsistent with prior duties, responsibilities
and status, or a material change in reporting responsibilities,
titles or offices, (ii) reduction in base salary,
(iii) failure to continue comparable incentive
compensation, (iv) failure to continue comparable stock
option and other fringe benefits, (v) relocation beyond
fifty (50) miles or (vi) any purported termination of
the Named Executive Officer other than for Cause for
Termination, Disability or Retirement or made without a
specified written notice of termination.
Retirement: termination of the Named Executive
Officers employment after age sixty-five (65) or in
accordance with any mandatory retirement arrangement with
respect to an earlier age agreed to by such Named Executive
Officer.
Termination
Payments and Benefits After a
Change-in-Control
The agreements with Messrs. Young, Blakemore, McAndrew and
Wertheimber provide for payments and other benefits if such
Named Executive Officer is terminated within two (2) years
(three (3) years in the case of
25
Mr. Young) following a
Change-in-Control
either by (i) us other than for Cause for Termination,
death, Disability or Retirement or (ii) the
individuals resignation for Good Reason for Termination.
Additionally, Mr. Young would have been entitled to
payments and benefits if he had terminated his employment for
any reason during a thirty (30) day period commencing six
(6) months after a
Change-in-Control.
In addition to any accrued but unpaid benefits, the agreements
entitle each Named Executive Officer to an amount of cash equal
to the sum of:
|
|
|
|
|
two (2) times (three (3) times in the case of
Messrs. Blakemore and Young) the sum of his then current
annual base salary in the year of termination (or, if greater,
(x) in the case of termination for Good Reason for
Termination, the Named Executive Officers salary preceding
the date giving rise to his Good Reason for Termination or
(y) the Named Executive Officers salary for the year
in effect on the date of the
Change-in-Control)
|
|
|
two (2) times (three (3) times in the case of
Messrs. Blakemore and Young) the greatest of (x) one
third (1/3)
of the aggregate cash bonuses or awards received by the Named
Executive Officer as incentive compensation or bonus during the
three (3) calendar years immediately preceding the date of
termination, (y) in the case of termination for Good Reason
for Termination, one third (1/3) of the aggregate cash bonuses
or awards received by the Named Executive Officer as incentive
compensation or bonus during the three (3) calendar years
preceding the date giving rise to the Named Executive
Officers Good Reason for Termination or (z) one third
(1/3) of the aggregate cash bonuses or awards received by the
Named Executive Officer as incentive compensation or bonus
during the three (3) calendar years preceding the date of
the
Change-in-Control
|
|
|
an amount equal to the total cash award or bonus that would have
been received by the Named Executive Officer under any long-term
incentive plan, assuming that, in addition to any goals met
prior to the termination date, all goals that were to be
measured after such date were achieved and the Named Executive
Officer remained employed, less any portion of the cash award or
bonus for that award period previously paid to the Named
Executive Officer
|
|
|
medical insurance and other similar benefits for the period of
two (2) years (three (3) years in the case of
Mr. Young and eighteen (18) months in the case of
Mr. Blakemore) following the termination date, as if such
Named Executive Officer remained in our continuous employ during
such period
|
|
|
unvested options will vest and remain outstanding in accordance
with their respective terms
|
Such payments are to be made to Messrs. Young, Blakemore,
McAndrew and Wertheimber on or before the sixtieth (60th) day
following the termination date.
26
Estimated
Termination and
Change-in-Control
Payments
R. Terry
Blakemore:
The following table sets forth the potential
payments(1),
in addition to accrued benefits, that Mr. Blakemore would
be entitled to receive assuming that his employment was
terminated on March 31, 2008 pursuant to the terms
described above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Termination
|
|
|
Salary
|
|
|
Bonus
|
|
|
Medical and
|
|
|
Acceleration of
|
|
|
Total
|
|
|
|
($)
|
|
|
($)
|
|
|
Other Similar
|
|
|
Unvested Stock
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
|
Options(2)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuation
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying termination prior to a
Change-in-Control
|
|
|
771,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
771,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying termination following a
Change-in-Control
|
|
|
1,500,000
|
|
|
493,750
|
|
|
|
20,790
|
(4)
|
|
|
|
|
|
2,014,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The payments shown reflect the maximum amount that would have
been paid. Mr. Blakemores agreement contains a
provision which could have the effect of reducing such payments
based on the effect of excise taxes applicable to such payments
under the Code. |
|
(2)
|
|
Represents the value of the acceleration of unvested options as
of March 31, 2008 based on the difference between the
exercise price of the unvested options and the closing price of
the Common Stock on Nasdaq on March 31, 2008. |
|
(3)
|
|
In addition, the Employee Plan provides that, regardless of
employment termination, in the event of a
change-in-control,
all then-outstanding options will vest immediately and become
exercisable. For purposes of the Employee Plan, a
change-in-control
of the Company occurs if (i) any person becomes the
beneficial owner, directly or indirectly, of our securities
representing (a) fifty percent (50%) or more of the
combined voting power of our then-outstanding securities or
(b) twenty-five percent (25%) or more but less than fifty
percent (50%) of the combined voting power of our
then-outstanding securities if such transaction(s) giving rise
to such beneficial ownership are not approved by our Board; or
(ii) at any time a majority of the members of our Board
have been elected or designated by any such person; or
(iii) our Board approves a sale of all or substantially all
of our assets or any merger, consolidation, issuance of
securities or purchase of assets, the result of which would be
the occurrence of any event described in clause (i) or
(ii) above. |
|
(4)
|
|
Represents the value of continued health, dental and vision
benefits for an eighteen (18) month period based on COBRA
(Consolidated Omnibus Budget Reconciliation Act) rates as of
March 31, 2008. |
Fred C.
Young:
Mr. Young resigned from his position as our Chief Executive
Officer and as a director on May 20, 2007. He was not
entitled to any severance, bonus, medical or other similar
benefits under his agreement as a result of such resignation,
although he was entitled to elect to receive medical benefits
under COBRA at his cost. As noted above, Mr. Youngs
agreement provided that, in the event his employment terminated
on or after May 11, 2007 by his resignation at any time
other than at a time when he could have been terminated due to
Cause for Termination, all of his unvested options would have
vested and all of his options would have remained outstanding in
accordance with their respective terms until their stated
expiration date. Our Audit Committee concluded and recommended
to our Board, and our Board determined, that Mr. Young
could have been terminated due to Cause for Termination (as
defined in his agreement) at the time Mr. Young resigned as
a director and as an officer of the Company on May 20,
2007. In light of that determination and the terms of his
agreement and his stock option agreements, all outstanding stock
options held by Mr. Young terminated as of the date of his
resignation.
27
Estimated
Change-in-Control
Payments
The following table sets forth the potential
payments(1),
in addition to accrued benefits, that the Named Executive
Officers, other than Messrs. Blakemore and Young, would be
entitled to receive assuming that the Named Executive
Officers employment was terminated on March 31, 2008
pursuant to the terms described above in connection with a
Change-in-Control:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Salary
|
|
|
Bonus
|
|
|
Medical and
|
|
|
Acceleration of
|
|
|
Total
|
|
|
|
($)
|
|
|
($)
|
|
|
Other Similar
|
|
|
Unvested Stock
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
|
Options(2)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuation
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael McAndrew
|
|
|
|
500,000
|
|
|
|
|
91,667
|
|
|
|
|
20,113
|
(4)
|
|
|
|
|
|
|
|
|
611,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis W. Wertheimber
|
|
|
|
590,060
|
(5)
|
|
|
|
121,563
|
(5)
|
|
|
|
10,780
|
(6)
|
|
|
|
|
|
|
|
|
722,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The payments shown reflect the maximum amount that would have
been paid. The agreement with each of Messrs. McAndrew and
Wertheimber contains a provision which could have the effect of
reducing such payments based on the effect of excise taxes
applicable to such payments under the Code. |
|
(2)
|
|
Represents the value of the acceleration of unvested options as
of March 31, 2008 based on the difference between the
exercise price of the unvested options and the closing price of
the Common Stock on Nasdaq on March 31, 2008. |
|
(3)
|
|
In addition, the Employee Plan provides that, regardless of
employment termination, in the event of a
change-in-control,
all then-outstanding options will vest immediately and become
exercisable. For purposes of the Employee Plan, a
change-in-control
of the Company occurs if (i) any person becomes the
beneficial owner, directly or indirectly, of our securities
representing (a) fifty percent (50%) or more of the
combined voting power of our then-outstanding securities or
(b) twenty-five percent (25%) or more but less than fifty
percent (50%) of the combined voting power of our
then-outstanding securities if such transaction(s) giving rise
to such beneficial ownership are not approved by our Board; or
(ii) at any time a majority of the members of our Board
have been elected or designated by any such person; or
(iii) our Board approves a sale of all or substantially all
of our assets or any merger, consolidation, issuance of
securities or purchase of assets, the result of which would be
the occurrence of any event described in clause (i) or
(ii) above. |
|
(4)
|
|
Represents the value of continued health, dental and vision
benefits for a two (2) year period based on COBRA rates as
of March 31, 2008. |
|
(5)
|
|
For Mr. Wertheimber, this value represents a conversion
from Japanese yen to U.S. dollars using exchange rates on
March 31, 2008. |
|
(6)
|
|
Represents the value of continued medical and similar benefits
for a two (2) year period beginning March 31, 2008
based on rates determined under the Japanese health care system
and is converted from Japanese yen to U.S. dollars using an
exchange rate on March 31, 2008. |
28
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following is the report of the Audit Committee with respect
to the audited financial statements for Fiscal 2008 included in
the Companys Annual Report on
Form 10-K
for the fiscal year ended March 31, 2008 (2008
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.
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 2008,
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 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 that the Companys
audited financial statements be included in its 2008
Form 10-K.
Audit Committee:
Richard L. Crouch, Chairman
Thomas W. Golonski
Thomas G. Greig
29
EQUITY
PLAN COMPENSATION INFORMATION
The following table sets forth information about our equity
compensation plans as of March 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
|
(b)
|
|
|
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
Plans
|
|
|
Number of Securities to Be
|
|
|
|
Weighted-Average
|
|
|
|
Remaining Available for
|
|
|
|
|
Issued Upon Exercise of
|
|
|
|
Exercise Price of
|
|
|
|
Future Issuance Under
|
|
|
|
|
Outstanding Options,
|
|
|
|
Outstanding Options,
|
|
|
|
Equity Compensation Plans
|
|
|
|
|
Warrants and Rights
|
|
|
|
Warrants and Rights
|
|
|
|
(Excluding Securities
|
|
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
Reflected in Column (a))
|
|
|
|
|
|
|
|
|
|
|
|
|
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by
security holders
|
|
|
|
2,583,715(1)
|
|
|
|
|
40.27
|
|
|
|
|
1,928,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not
approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
2,583,715
|
|
|
|
|
40.27
|
|
|
|
|
1,928,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes both vested and unvested options. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information publicly available,
as of March 31, 2008, regarding the beneficial ownership of
our Common Stock by all stockholders known by us to be
beneficial owners of more than five percent (5%) of our
outstanding Common Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Percent of
|
|
|
|
Shares
|
|
|
Shares(6)
|
FMR
Corp.(1)
|
|
|
|
1,981,025
|
|
|
|
|
11.3%
|
|
82 Devonshire Street, Boston, MA 02109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors
LP(2)
|
|
|
|
1,458,867
|
|
|
|
|
8.3%
|
|
1299 Ocean Avenue, Santa Monica, CA 90401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sterling Capital Management
LLC(3)
|
|
|
|
1,078,403
|
|
|
|
|
6.2%
|
|
Two Morrocroft Centre, 4064 Colony Road, Suite 300,
Charlotte, NC 28211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXA(4)
|
|
|
|
963,243
|
|
|
|
|
5.5%
|
|
26, avenue Matignon, 75008 Paris, France
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barclays Global Investors,
NA(5)
|
|
|
|
931,140
|
|
|
|
|
5.3%
|
|
45 Fremont Street, San Francisco, CA 94105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes 1,981,025 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 1,981,025 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. This information is derived from FMR
Corp.s Schedule 13G filed with the SEC on
February 14, 2007. |
30
|
|
|
(2)
|
|
Dimensional Fund Advisors LP (formerly, Dimensional
Fund Advisors Inc. (Dimensional)) is a
registered investment advisor that furnishes investment advice
to four registered investment companies and serves as investment
manager to certain other commingled group trusts and separate
accounts. Dimensional beneficially owns 1,458,867 shares,
of which it has sole voting power and sole dispositive power.
This information is derived from Amendment No. 2 to
Dimensionals Schedule 13G filed with the SEC on
February 6, 2008. |
|
(3)
|
|
Sterling Capital Management LLC (Sterling) is a
registered investment adviser whose clients have the right to
receive or the power to direct the receipt of dividends from, or
the proceeds from the sale of the shares of the Companys
Common Stock. Sterling beneficially owns 1,078,403 shares,
of which it has sole voting power and sole dispositive power.
This information is derived from Amendment No. 3 to
Sterlings Schedule 13G filed with the SEC on
January 29, 2008. |
|
(4)
|
|
Includes 1,400 shares beneficially owned by AXA Konzern AG
(Germany), of which it has sole voting power and sole
dispositive power. Includes 918,278 shares beneficially
owned by AXA Rosenberg Investment Management LLC, of which it
has sole voting power with respect to 421,346 shares and
sole dispositive power with respect to 918,278 shares.
Includes 8,300 shares beneficially owned by Winterthur, of
which it has sole voting power and sole dispositive power.
Includes 33,865 shares beneficially owned by
AllianceBernstein L.P., of which it has sole voting power with
respect to 33,040 shares, shared voting power with respect
to 75 shares and sole dispositive power with respect to
33,865 shares. Also includes 1,400 shares beneficially
owned by AXA Equitable Life Insurance Company, of which it has
sole voting power and 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 Amendment
No. 2 to AXAs Schedule 13G filed with the SEC on
February 14, 2008. |
|
(5)
|
|
Includes 382,318 shares beneficially owned by Barclays
Global Investors, NA, of which it has sole voting power with
respect to 309,694 shares and sole dispositive power with
respect to 382,318 shares. Includes 530,683 shares
beneficially owned by Barclays Global Fund Advisors, of
which it has sole voting power with respect to
384,336 shares and sole dispositive power with respect to
530,683 shares. Includes 18,139 shares beneficially
owned by Barclays Global Investors, Ltd, of which it has sole
dispositive power. This information is derived from
Barclays Schedule 13G filed with the SEC on
February 5, 2008. |
|
(6)
|
|
Based on 17,516,305 shares outstanding as of March 31,
2008. |
31
SECURITY
OWNERSHIP OF MANAGEMENT
The following table sets forth certain information available to
us, as of March 31, 2008, regarding the shares of our
Common Stock beneficially owned by (i) each of our
directors; (ii) each of our Named Executive Officers and
(iii) all of our directors and executive officers as a
group:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Percent of
|
|
|
|
|
Shares
|
|
|
Shares(4)
|
|
William F.
Andrews(1)
|
|
|
|
57,335
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Terry
Blakemore(2)
|
|
|
|
66,667
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard L.
Crouch(1)
|
|
|
|
15,633
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas W.
Golonski(1)
|
|
|
|
26,833
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas G.
Greig(1)
|
|
|
|
47,336
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
McAndrew(2)
|
|
|
|
104,386
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward A.
Nicholson, Ph.D.(1)
|
|
|
|
15,333
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis W.
Wertheimber(2)
|
|
|
|
236,773
|
|
|
|
1.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fred C. Young
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group of
eight (8) persons(3)
|
|
|
|
570,296
|
|
|
|
3.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes for Messrs. Andrews, Crouch, Golonski and Greig
and Dr. Nicholson: 47,335, 15,333, 26,333, 41,335 and
15,333 shares, respectively, pursuant to rights to acquire
such shares as a result of vested options, as of March 31,
2008 or within sixty (60) days thereafter, granted under
the Director Plan. |
|
(2)
|
|
Includes for Messrs. Blakemore, McAndrew and Wertheimber:
66,667, 104,385 and 236,772 shares, respectively, pursuant
to rights to acquire such shares as a result of vested options,
as of March 31, 2008 or within sixty (60) days
thereafter, granted under the Employee Plan. |
|
(3)
|
|
Includes for all directors and executive officers as a group
553,493 shares pursuant to rights to acquire such shares as
a result of vested options as of March 31, 2008 or within
sixty (60) days thereafter, granted under the Employee Plan
and the Director Plan. Excludes Mr. Young who was not an
executive officer as of March 31, 2008. |
|
(4)
|
|
Based on 17,516,305 shares outstanding as of March 31,
2008. |
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 our outstanding Common Stock. |
32
SUMMARY
OF INCENTIVE PLAN
The following is a summary description of the Incentive Plan
that our Board adopted, and for which we are seeking stockholder
approval with respect to Proposal 2. This summary is not a
complete statement of the Incentive Plan and is qualified in its
entirety by reference to the complete text of the Incentive
Plan, a copy of which is attached hereto as Exhibit I.
Additional information regarding the Incentive Plan is set forth
under Annual Meeting Matters
Proposal 2 Approval of the 2008 Long-Term
Incentive Plan of this proxy statement.
Purpose. The purpose of the Incentive
Plan is to advance our interests and the interests of our
stockholders by providing incentives to certain employees,
directors, consultants and other individuals who contribute
significantly to our strategic and long-term performance
objectives and growth. The Incentive Plan will replace our
Employee Plan and our Director Plan.
Administration. The Incentive Plan will
be administered by our Compensation Committee or such other
committee as determined by our Board, or by the Board itself
(Committee). Our Committee will have the authority,
among other matters, to select Incentive Plan participants,
grant awards under the Incentive Plan, determine the type, size,
terms and conditions of Incentive Plan awards and to adopt rules
for the administration, interpretation and application of the
Incentive Plan in accordance with its terms.
Types of Awards under the Incentive
Plan. The Incentive Plan consists of the
following components: stock options, stock appreciation rights,
restricted stock, restricted stock units, performance grants
(cash and equity) and other share-based awards.
Grant of Awards; Shares Available for
Awards. Certain employees, directors and
consultants are eligible to receive grants of awards under the
Incentive Plan until June 23, 2018. The maximum number of
shares of Common Stock available for issuance under the
Incentive Plan is 900,000 plus the number of shares of Common
Stock that remain available for the grant of awards under the
Employee Plan and the Director Plan on the date that the
Incentive Plan is approved by our stockholders, plus the number
of shares subject to stock options outstanding under the
Employee Plan and the Director Plan on the date that the
Incentive Plan is approved by our stockholders that are
forfeited or cancelled prior to exercise; the aggregate number
of shares of Common Stock available for issuance under the
Incentive Plan shall be reduced by one (1) share of Common
Stock for each share of Common Stock issued in settlement of an
award; provided, however, that such aggregate number of
shares of Common Stock available for issuance under the
Incentive Plan will be reduced by 1.87 shares of Common
Stock for each share of Common Stock issued in settlement of a
Full-Value Award, meaning any award which may result
in the issuance of Common Stock other than a stock option or
stock appreciation right. No person will receive, in any one
fiscal year, stock options or stock appreciation rights for more
than 900,000 shares or performance grants for more than
500,000 shares or for more than $5,000,000. The number of
shares of Common Stock issued or reserved pursuant to the
Incentive Plan will be subject to adjustment as a result of
stock splits, stock dividends and similar changes in Common
Stock, as described more fully below.
If any shares of Common Stock issued pursuant to an award under
the Incentive Plan are forfeited or cancelled, then such shares
of Common Stock that are forfeited or cancelled will be or
become available for issuance under the Incentive Plan. Shares
of Common Stock (i) delivered in payment of the exercise
price of a stock option, (ii) not issued upon settlement of
a stock appreciation right or (iii) delivered to or
withheld by the Company to pay withholding taxes shall not
become available for issuance under the Incentive Plan.
Stock Options. Our Committee may grant
a stock option qualified as an incentive stock option under the
Code (an Incentive Stock Option), or a stock option
not qualified as such under the Code (collectively, an
option), to Incentive Plan participants. The
exercise price of an option will be equal to or greater than the
fair market value of the Common Stock subject to such option on
the date of grant of the option; provided,
however, that if an Incentive Stock Option is granted to
an employee who owns more than 10% of the voting power of all
classes of our stock, or stock of any of our parents or
subsidiaries (a ten-percent employee), the exercise
price will not be less than 110% of the fair market value at the
time the Incentive Stock Option is granted. An option may be
exercised within such period or periods as may be determined by
our Committee; provided, however, that in the case
of any Incentive Stock Option granted to a ten-percent employee,
such Incentive Stock Option will not be exercisable after the
expiration of five (5) years from the date of grant, and,
in the case of any other option, after the
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expiration of ten (10) years from the date of grant. The
aggregate fair market value of the Common Stock for which
Incentive Stock Options are exercisable for the first time by an
optionee during any calendar year under the terms of the
Incentive Plan will not exceed the sum of $100,000.
The exercise price of an option will be paid in such form as our
Committee may determine, including, but not limited to, cash,
shares of Common Stock, the surrender of another outstanding
award under the Incentive Plan, broker-assisted cashless
exercise or any combination thereof.
Stock Appreciation Rights. Our
Committee may grant stock appreciation rights under the
Incentive Plan, which will be exercisable as determined by our
Committee but for a term not in excess of ten (10) years.
Stock appreciation rights, if granted, will entitle the holder
upon exercise to receive, without payment to us, that number of
shares of Common Stock (or cash, other securities or other
property or other form of payment or any combination thereof)
equal to the excess of the fair market value of the shares
covered by the right over the exercise price of the stock
appreciation right.
Restricted Stock and Restricted Stock
Units. Our Committee may grant restricted
stock and restricted stock units under the Incentive Plan. It
has the authority to determine the number of shares of
restricted stock
and/or the
number of restricted stock units to be granted to each
participant and the duration of such awards. Our Committee may
also grant dividend equivalent rights to participants in
connection with awards of restricted stock units which will
provide that dividend equivalents will be paid or distributed
when accrued or will be deemed to have been reinvested in
additional Common Stock or other investment vehicles as
specified by our Committee. The standard vesting schedule
applicable to restricted stock and restricted stock units will
provide for vesting of such awards, in one or more increments,
over a service period of no less than three (3) years;
provided, however, that this limitation shall not
(i) apply to awards granted to non-employee directors of
the Board that are received pursuant to the Companys
compensation program applicable to non-employee directors of the
Board, (ii) apply to awards for Restricted Stock or
Restricted Stock Units together with other Full-Value Awards for
up to an aggregate of 10% of the maximum number of shares of
Common Stock that may be issued under the Incentive Plan or
(iii) adversely affect a Participants rights under
another plan or agreement with the Company.
Performance Grants. Our Committee may
award performance grants under the Incentive Plan. A
performance grant will consist of a right that is:
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denominated in cash, shares of Common Stock or any other form of
award;
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valued, as determined by our Committee, in accordance with the
achievement of performance goals during the applicable
performance periods (which may consist of one or more calendar
years or other fiscal period of at least twelve (12) months
in length for which performance is being measured); and
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payable at such time and in the form as our Committee determines.
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Performance grants may be paid in a lump sum or in installments
following the close of the performance period or on a deferred
basis. For awards intended to be performance-based compensation
under Section 162(m) of the Code, performance grants will
be conditioned upon the achievement of pre-established goals
relating to one or more of the following performance measures
(subject to such modifications as specified by our Committee):
cash flow; cash flow from operations; earnings (including
earnings before interest, taxes, depreciation and amortization
or some variation thereof); earnings per share, diluted or
basic; earnings per share from continuing operations; days sales
outstanding; net asset turnover; inventory turnover; capital
expenditures; debt; debt reduction; working capital; return on
investment; return on sales; net or gross sales; market share;
economic value added; cost of capital; change in assets; expense
reduction levels; productivity; delivery performance; stock
price; return on equity; total or relative increases to
stockholder return; return on capital; return on assets or net
assets; revenue; income or net income; operating income or net
operating income; operating profit or net operating profit;
gross margin, operating margin or profit margin; and completion
of acquisitions, business expansion, product diversification and
other non-financial operating and management performance
objectives.
To the extent consistent with Section 162(m) of the Code,
our Committee may determine that certain adjustments will apply,
in whole or in part, in such manner as determined by it, to
exclude the effect of any of the following events that occur
during a performance period: the impairment of tangible or
intangible assets; litigation or claim judgments or settlements;
the effect of changes in tax law, accounting principles or other
such laws or
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provisions affecting reported results; business combinations,
reorganization
and/or
restructuring programs, including, but not limited to,
reductions in force and early retirement incentives; currency
fluctuations; and any extraordinary, unusual, infrequent or
non-recurring items, including, but not limited to, such items
described in Managements Discussion and Analysis of
Financial Condition and Results of Operations or the financial
statements or notes thereto appearing in our Annual Report on
Form 10-K
for the applicable fiscal year. Performance measures may be
determined either individually, alternatively or in any
combination, applied to either the Company as a whole or to a
business unit or subsidiary entity thereof, either individually,
alternatively or in any combination, measured over a period of
time including any portion of a year, annually or cumulatively
over a period of years, on an absolute basis or relative to a
pre-established target, to previous fiscal years results
or to a designated comparison group, in each case as specified
by our Committee.
Our Committee may, in its sole discretion, also establish such
additional restrictions or conditions that must be satisfied as
a condition precedent to the payment of all or a portion of any
performance grant. It may also reduce the amount of any
performance grant payable in cash if it concludes that such
reduction is necessary or appropriate based on:
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an evaluation of such participants performance;
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comparisons with compensation received by other
similarly-situated individuals working within our industry;
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our financial results and conditions; or
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such other factors or conditions that our Committee deems
relevant; provided, that it will not have the discretion
to increase any award that is intended to be performance-based
compensation under Section 162(m) of the Code.
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Other Share-Based Awards. Our Committee
may grant other share-based awards under the Incentive Plan,
which consist of any right that is not an award described above;
an award of shares of Common Stock or an award denominated or
payable in, valued in whole or in part by reference to or
otherwise based on or related to, shares of Common Stock
(including, without limitation, securities convertible into
shares of Common Stock), as deemed by our Committee to be
consistent with the purposes of the Incentive Plan. Generally,
the standard vesting schedule applicable to any Full-Value Award
shall provide for vesting of such Full-Value Award, in one or
more increments, over a service period of no less than three
(3) years; provided, however, that this limitation
shall not (i) apply to awards granted to non-employee
directors of the Board that are received pursuant to the
Companys compensation program applicable to non-employee
directors of the Board, (ii) apply to awards for Restricted
Stock or Restricted Stock Units together with other Full-Value
Awards for up to an aggregate of 10% of the maximum number of
shares of Common Stock that may be issued under the Incentive
Plan or (iii) adversely affect a Participants rights
under another plan or agreement with the Company.
Termination of Employment; Disability; Death;
Retirement. Upon an employees
termination of employment with us, or cessation of a
directors service on our Board, an award previously
granted to the employee or the director, as the case may be,
unless otherwise specified by our Committee in the award
agreement, will, to the extent not exercised with respect to any
option or stock appreciation right, or to the extent that any of
the designated goals have not been achieved within the
designated period prior to the lapse of any restrictions or
vesting of any other award, will become null and void and be
forfeited, provided that:
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if the employee or the director dies while in our employ or
while serving on our Board or during either the three
(3) month period after the termination date of employment
or service in the case of termination by reason of retirement
(at such age or upon such conditions as shall be specified by
our Board) or dismissal other than for cause (as defined in the
Incentive Plan) or the one (1) year period after the
termination date of employment or service in the case of
termination by reason of disability (as described in Section
22(e)(3) of the Code), the legal representative or heirs of such
employee or director will be entitled to exercise such option or
stock appreciation right (to the extent otherwise exercisable)
for a one-year period following the date of death
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if the employment of an employee or the service of a director to
whom an option or stock appreciation right will have been
granted terminates by reason of retirement, disability or
termination other than for cause, then such employee or director
will have the right to exercise such option or right (to the
extent
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otherwise exercisable) at any time up to (i) three
(3) months after termination by reason of retirement or
other than for cause and (ii) one (1) year after
termination by reason of disability
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if the employment of an employee or the service of a director to
whom an award of restricted stock or restricted stock units or
any other share-based award will have been granted terminates by
reason of such persons death, retirement or disability,
and prior to the forfeiture of such award, the award will vest
and all restrictions will lapse as of the date of such
persons death, retirement or disability
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if an employee voluntarily terminates his or her employment, or
if a director voluntarily terminates his or her service on our
Board, or is discharged for cause (in both instances), any award
granted under the Incentive Plan will, unless otherwise
specified by our Committee in the award agreement, terminate and
be forfeited with respect to any unexercised or unvested portion
thereof
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Change-in-Control. In
the event of a
change-in-control
of the Company, as defined in the Incentive Plan, all
then-outstanding awards will immediately vest and become
exercisable and all restrictions will lapse. Our Committee, in
its sole discretion, may determine that, upon the occurrence of
a
change-in-control
transaction, each outstanding award will terminate within a
specified number of days after notice to the holder, and such
holder will receive, with respect to each such award, cash in an
amount equal to the fair market value of such award as
determined by our Committee.
Dilution and Other Adjustments. In the
event a dividend (other than a regular cash dividend) or other
distribution (whether in the form of cash, shares of Common
Stock, other securities or other property), recapitalization,
stock split, reverse stock split, reorganization, merger,
consolidation,
split-up,
spin-off, combination, repurchase or exchange of shares of
Common Stock or other of our securities, issuance of warrants or
other rights to purchase shares of Common Stock or other of our
securities or other similar corporate transaction or event
affects the shares of Common Stock such that an adjustment is
necessary in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under the Incentive Plan, then the Committee will, in an
equitable manner, adjust an award or, if deemed appropriate,
provide for an equivalent award or substitute award or make
provision for a cash payment to the holder of an outstanding
award. Unless otherwise provided by our Committee, all
outstanding awards will terminate immediately prior to the
consummation of our dissolution or liquidation. Any such
termination or adjustment made by our Committee will be final,
conclusive and binding for all purposes of the Incentive Plan.
Amendment and Termination. Our
Committee or our Board may amend or suspend the Incentive Plan
at any time. Our Committee also may amend or modify any award
under the Incentive Plan; provided, however, that no such
amendment or suspension of the Incentive Plan or amendment or
modification of an award may accelerate the vesting or
exercisability of any award, other than in connection with a
participants death, disability, retirement or a
change-in-control
or other similar transaction (except for certain performance
grants that remain contingent upon the attainment of the
performance goal) or may adversely affect, in a material manner,
any right of any participant with respect to any award
previously granted without such persons written consent.
Notwithstanding the foregoing or any provision of the Incentive
Plan to the contrary, our Committee may at any time (without the
consent of participants) modify, amend or terminate any or all
of the provisions of the Incentive Plan or any outstanding award
to the extent necessary to conform the provisions of the
Incentive Plan with Section 162(m), Section 409A or
any other provisions of the Code or other applicable law.
No Repricing. Except in the event of a
change-in-control
or a dividend (other than a regular cash dividend) or other
distribution (whether in the form of cash, shares of Common
Stock, other securities or other property), recapitalization,
stock split, reverse stock split, reorganization, merger,
consolidation,
split-up,
spin-off, combination, repurchase or exchange of shares of
Common Stock or other Company securities, issuance of warrants
or other rights to purchase shares of Common Stock or other
Company securities or other similar corporate transaction or
event that affects the shares of Common Stock such that an
adjustment is necessary in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Incentive Plan, the terms of
outstanding awards may not be amended to reduce the exercise
price of outstanding stock options or stock appreciation rights
or cancel or surrender outstanding stock options or stock
appreciation rights in exchange for cash, other awards or stock
options or stock appreciation rights with an exercise price that
is less than the exercise price of the original stock options or
stock appreciation rights without stockholder approval.
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Transferability. A participants
rights and interest under the Incentive Plan or any award may
not be assigned or transferred in any manner; provided,
however, that our Committee may permit such transfers to
certain permitted transferees and provided, further,
that, unless otherwise permitted by the Code, any Incentive
Stock Options will not be transferable other than by will or by
the laws of descent and distribution.
Federal
Tax Consequences
The following is a brief summary of the principal United States
federal income tax consequences applicable to Incentive Plan
participants and us, 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 or constitute tax advice and does not
describe state, local or foreign tax consequences. To the extent
any awards under the Incentive 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 Section 409A of the Code and the regulations promulgated
thereunder (or an exception thereto). The Incentive 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.
Incentive
Stock Options
Options issued under the Incentive 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 who
has been granted an incentive stock option will not recognize
income and we will not be entitled to a deduction at the time of
the grant or exercise of the option; provided,
however, that the difference between the value of the
Common Stock received on the exercise date and the exercise
price paid is an item of tax preference for purposes of
determining the optionees alternative minimum tax. The
taxation of gain or loss upon the sale of the Common Stock
acquired upon exercise of an incentive stock option depends, in
part, on whether the holding period of the Common Stock is at
least two (2) years from the date the incentive stock
option was granted and at least one (1) year from the date
the Common Stock was transferred to the optionee. If this
holding period is satisfied, any gain or loss realized on a
subsequent disposition of the Common Stock will be treated as a
long-term capital gain or loss. If this holding period is not
met, then, upon such disqualifying disposition of
the Common Stock, the optionee will realize compensation,
taxable as ordinary income, in an amount equal to the excess of
the fair market value of the Common Stock at the time of
exercise over the incentive stock option price limited, however,
to the gain on sale. Any further gain (or loss) realized by the
optionee generally will be taxed as short-term or long-term
capital gain (or loss) depending on the holding period. If the
optionee recognizes ordinary income upon a disqualifying
disposition, we generally will be entitled to a tax deduction in
the same amount.
Nonqualified
Stock Options and Stock Appreciation Rights
An optionee will generally not recognize income at the time a
nonqualified stock option is granted. Rather, the optionee
recognizes compensation income only when the nonqualified stock
option is exercised. The amount of income recognized is equal to
the excess of the fair market value of the Common Stock received
over the sum of the exercise price plus the amount, if any, paid
by the optionee for the nonqualified stock option. We are
generally entitled to a tax deduction in an amount equal to the
compensation income recognized by the optionee. Upon a
subsequent disposition of the Common Stock acquired under a
nonqualified stock option, the optionee will realize short-term
or long-term capital gain (or loss) depending on the holding
period. The capital gain (or loss) will be short-term if the
Common Stock is disposed of within one (1) year after the
nonqualified stock option is exercised and long-term if the
Common Stock was held more than twelve (12) months as of
the sale date.
Stock appreciation rights are treated very similarly to
nonqualified stock options for tax purposes. A participant
receiving a stock appreciation right will not normally recognize
any taxable income upon the grant of the stock appreciation
right. Upon the exercise of the stock appreciation right, the
participant will recognize compensation taxable as ordinary
income equal to either: (i) the cash received upon the
exercise or (ii) if Common Stock is received upon the
exercise of the stock appreciation right, the fair market value
of the Common Stock received. We will generally be entitled to a
tax deduction in an amount equal to the compensation income
recognized by the participant.
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Unrestricted
Stock
The tax consequences of receiving Common Stock pursuant to a
stock award under the Incentive Plan is similar to receiving
cash compensation from us, unless the Common Stock awarded is
restricted stock (i.e., subject to a substantial risk of
forfeiture). If the shares of Common Stock are unrestricted
(i.e., not subject to a substantial risk of forfeiture),
the participant must recognize ordinary income equal to the fair
market value of the Common Stock received less any amount paid
for Common Stock.
Restricted
Stock
A participant that receives a restricted stock award under the
Incentive Plan will normally not be required to recognize income
for federal income tax purposes at the time of grant, nor are we
entitled to any deduction, to the extent that the Common Stock
awarded has not vested (i.e., no longer subject to a
substantial risk of forfeiture). When any part of a restricted
stock award vests, the participant will realize compensation
taxable as ordinary income in an amount equal to the fair market
value of the vested Common Stock on the vesting date. The
participant may, however, make an election, referred to as a
Section 83(b) election, within thirty (30) days
following the grant of the restricted stock award, to be taxed
at the time of the grant of the award based on the fair market
value of the Common Stock on the date of grant. If a
Section 83(b) election has not been made, any dividends
received with respect to the restricted stock award prior to the
lapse of the restrictions will be treated as additional
compensation that is taxable as ordinary income to the
participant. We will be entitled to a deduction in the same
amount and at the same time that the participant recognizes
ordinary income. Upon the sale of the vested Common Stock, the
participant will realize short-term or long-term capital gain or
loss depending on the holding period.
Restricted
Stock Units
Under current tax law, a participant who receives restricted
stock units will not recognize taxable income for federal income
tax purposes until the Common Stock underlying the restricted
stock units are actually issued to the participant. Upon
issuance of Common Stock, the participant will recognize
compensation taxable as ordinary income in an amount equal to
the fair market value of the Common Stock received, and we will
be entitled to a corresponding deduction. If the participant is
our employee, the participant will be subject to Social Security
and Medicare taxes at the time the restricted stock units vest,
even though none of the Common Stock underlying the restricted
stock units is issued at that time. However, no additional
Social Security or Medicare taxes will be due when the Common
Stock subject to the vested restricted stock units is
subsequently issued (even if the market value of the Common
Stock has increased).
Performance
Grants
A participant generally will not recognize income upon the grant
of a performance award. Upon payment of the performance award,
the participant will recognize ordinary income in an amount
equal to the cash received or, if the performance award is
payable in Common Stock, the fair market value of the Common
Stock received. When the participant recognizes ordinary income
upon payment of a performance award, we will generally be
entitled to a tax deduction in the same amount.
Limitations
on Our Deductions; Consequences of
Change-in-Control
With certain exceptions, Section 162(m) of the Code limits
our deduction for compensation in excess of $1,000,000 paid to
certain covered employees (generally the Chief Executive Officer
and the four (4) other highest-paid executive officers). If
our stockholders approve the Incentive Plan, we believe that
stock options, stock appreciation rights and performance grants
(intended to be treated as qualified performance-based
compensation as defined in the Code) granted to covered
employees under the Incentive Plan will satisfy the requirements
of qualified performance-based compensation and, therefore, the
Company will be entitled to a deduction with respect to such
awards. 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. In addition, if a
change-in-control
of the Company causes awards under the Incentive Plan to
accelerate vesting or is deemed to result in the attainment of
performance goals, the participants could, in some cases, be
considered to have received
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excess parachute payments, which could subject
participants to a 20% excise tax on the excess parachute
payments and could result in a disallowance of deductions under
Section 280G of the Code.
Internal
Revenue Code Section 409A
Awards of stock options, stock appreciation rights, restricted
stock units, other stock-based awards and performance awards
under the Incentive Plan may, in certain instances, result in
the deferral of compensation that is subject to the requirements
of Section 409A of the Code. Generally, to the extent that
these awards fail to meet certain requirements under
Section 409A, the regulations issued thereunder or an
exception thereto, the participant will be subject to immediate
taxation and tax penalties in the year the award vests. We
intend that awards under the Incentive Plan will be structured
and administered in a manner that complies with the requirements
of Section 409A of the Code or an exception thereto.
Section 409A does not impose any penalties on us and does
not limit our deduction with respect to compensation paid to a
participant.
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INDEPENDENT
PUBLIC ACCOUNTANTS
Fees
Billed to Us by BDO during Fiscal 2008 and Fiscal 2007
Audit Fees: An aggregate of $2,357,000
was billed for professional services rendered and for expenses
for the audit of our annual financial statements for Fiscal
2008, attestation of managements report on our internal
controls over financial reporting, statutory audits required
internationally and the review of financial statements included
in our quarterly reports on
Form 10-Q
during Fiscal 2008. An aggregate of $2,681,100 was billed for
professional services rendered and for expenses for the audit of
our annual financial statements for Fiscal 2007, attestation of
managements report on our internal controls over financial
reporting, statutory audits required internationally and the
review of financial statements included in our quarterly reports
on
Form 10-Q
during Fiscal 2007.
Audit-Related Fees: An aggregate of
$490,000 in audit-related fees, principally including fees
related to the Companys stock option investigation, were
billed by BDO during Fiscal 2008. An aggregate of $91,188 in
audit-related fees were billed by BDO during Fiscal 2007.
Tax Fees: No tax fees were billed by
BDO during Fiscal 2008 or Fiscal 2007.
All Other Fees: BDO did not render any
other professional services to us during Fiscal 2008 or Fiscal
2007.
All services performed by BDO are approved by our Audit
Committee or its chair prior to BDOs engagement for such
services. In the case of an approval by the chair of our Audit
Committee, such approval is presented for ratification by the
Audit Committee at its next regular meeting.
ADDITIONAL
INFORMATION
FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION
A copy of the 2008
Form 10-K
is available to stockholders. A stockholder may obtain such copy
free of charge on our Web site at
http://www.blackbox.com
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 our cost of providing such
exhibits).
SOLICITATION
OF PROXIES
We will pay the expenses in connection with the printing,
assembling and mailing to the holders of our Common Stock the
Notice of Annual Meeting of Stockholders, this proxy statement
and the accompanying form of proxy. In addition to the use of
the mails, our directors, officers or regular employees may
solicit proxies personally or by telephone or telegraph. We 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. In addition, we have engaged
Georgeson Inc. to assist in soliciting proxies at a fee of
$8,500 plus per solicitation call fees, costs and expenses.
STOCKHOLDER
NOMINATIONS AND PROPOSALS
Stockholders who believe they are eligible to have their
proposals included in our proxy statement for the annual meeting
expected to be held in August 2009, 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 February 26, 2009.
Our 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.
Our 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 2009, notice of
nominations and proposals under this provision must be received
by March 15, 2009.
40
Such notice must set forth in reasonable detail information
concerning the nominee (in the case of a nomination for election
to our Board) or the substance of the proposal (in the case of
any other stockholder proposal), and shall include: (i) 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; (ii) a representation that the
proponent of the proposal is a holder of record of our stock
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; (iii) 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; (iv) 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 our
Board and (v) the consent of each nominee, if any, to serve
as a director on our Board, if elected. Within fifteen
(15) days following the receipt by the Secretary of a
notice of nomination or proposal pursuant hereto, the Secretary
will advise the proponent in writing of any deficiencies in the
notice and of any additional information we require to determine
the eligibility of the proposed nominee or the substance of the
proposal. A proponent who has been notified of deficiencies in
the notice of nomination or proposal
and/or of
the need for additional information must 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.
Our 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 our By-laws is
available upon request.
OTHER
MATTERS
Management does not intend to present nor, in accordance with
our 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 12, 2008, 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.
41
EXHIBIT I
BLACK
BOX CORPORATION
2008 LONG-TERM INCENTIVE
PLAN
Section 1. Purpose. The
purpose of this Plan is to advance the interests of Black
Box and its stockholders by providing incentives to certain
Eligible Persons who contribute significantly to the strategic
and long-term performance objectives and growth of the Company.
This Plan is intended to replace the Employee Plan and the
Director Plan and, from and after the Effective Date, no new
grants of awards may be made under the Employee Plan or the
Director Plan.
Section 2. Definitions. Certain
capitalized terms applicable to this Plan are set forth in
Appendix A.
Section 3. Administration. This
Plan shall be administered by the Committee. The Committee shall
have all the powers vested in it by the terms of this Plan, such
powers to include the exclusive authority to select the Eligible
Persons to be granted Awards under this Plan, to determine the
type, size, terms and conditions of the Award to be made to each
Eligible Person selected, to modify or waive (subject to the
provisions of Section 13 hereof) the terms and conditions
of any Award that has been granted, to determine the time when
Awards will be granted, to establish performance objectives, to
make any adjustments necessary or desirable as a result of the
granting of Awards to Eligible Persons located outside the
United States and to prescribe the form of the agreements
evidencing Awards made under this Plan. Awards may, in the sole
discretion of the Committee, be made under this Plan in
assumption of, or in substitution for, outstanding Awards
previously granted by (i) the Company, (ii) any
predecessor of the Company or (iii) a company acquired by
the Company or with which the Company combines. The number of
Common Shares underlying such substitute Awards shall be counted
against the aggregate number of Common Shares available for
Awards under this Plan.
The Committee is authorized to interpret this Plan and the
Awards granted under this Plan, to establish, amend and rescind
any rules and regulations relating to this Plan and to make any
other determinations that it deems necessary or desirable for
the administration of this Plan. The Committee may correct any
defect or omission or reconcile any inconsistency in this Plan
or in any Award in the manner and to the extent the Committee
deems necessary or desirable to carry it into effect. Any
decision of the Committee in the interpretation and
administration of this Plan, as described in this Plan, shall
lie within its sole and absolute discretion and shall be final,
conclusive and binding on all parties concerned (including, but
not limited to, Participants and their Permitted Transferees).
The Committee may act only by a majority of its members in
office, except that the members thereof may authorize any
one or more of their members or any officer of the Company to
execute and deliver documents or to take any other ministerial
action on behalf of the Committee with respect to Awards made or
to be made to Participants.
No member of the Committee and no officer of the Company shall
be liable for anything done or omitted to be done by such member
or officer, by any other member of the Committee or by any other
officer of the Company in connection with the performance of
duties under this Plan, except for his or her own willful
misconduct or as expressly provided by statute.
Section 4. Participation. Consistent
with the purposes of this Plan, the Committee shall have
exclusive power to select the Eligible Persons who may
participate in this Plan and be granted Awards under this Plan.
Eligible Persons may be selected individually or by groups or
categories, as determined by the Committee, in its sole
discretion.
Section 5. Awards under this Plan.
(a) Types of Awards. Awards under
this Plan may include, but need not be limited to, one or more
of the following types, either alone or in any combination
thereof: (i) Stock Options, (ii) Stock Appreciation
Rights, (iii) Restricted Stock, (iv) Restricted Stock
Units, (v) Performance Grants, (vi) Other Share-Based
Awards and (vii) any other type of Award deemed by the
Committee, in its sole discretion, to be consistent with the
purposes of this Plan (including, but not limited to, Associated
Awards and Awards to be made to Participants who are foreign
nationals or are employed or performing services outside the
United States). In the case of an Award granted in conjunction
with an Associated Award and subject to the provisions of
Section 16 hereof, the Award may be
reduced, on an appropriate basis, to the extent that the
Associated Award has been exercised, paid to or otherwise
received by the Participant, as determined by the Committee.
(b) Maximum Number of Common Shares that May be
Issued. The maximum aggregate number of Common
Shares available for issuance under Awards granted under this
Plan, including Incentive Stock Options, shall be 900,000 plus
the number of shares that remain available for the grant of
awards under the Employee Plan and the Director Plan on the
Effective Date, plus the number of shares subject to stock
options outstanding under the Employee Plan and the Director
Plan on the Effective Date that are forfeited or cancelled prior
to exercise; the aggregate number of Common Shares available for
issuance under the Plan shall be reduced by one (1) Common
Share for each Common Share issued in settlement of an Award;
provided, however, that such aggregate number of Common
Shares available for issuance under the Plan shall be reduced by
1.87 Common Shares for each Common Share issued in settlement of
a Full-Value Award. No Eligible Person may receive:
(i) Stock Options or Stock Appreciation Rights under this
Plan for more than 900,000 Common Shares in any one fiscal year
of Black Box, (ii) Performance Grants (denominated in
Common Shares) for more than 500,000 Common Shares in any one
fiscal year of Black Box and (iii) Performance Grants
(denominated in cash) for more than $5,000,000 in any one fiscal
year of Black Box. The foregoing limitations shall be subject to
adjustment as provided in Section 14 hereof, but only to
the extent that any such adjustment will not affect the status
of: (i) any Award intended to qualify as performance-based
compensation under Section 162(m) of the Code,
(ii) any Award intended to qualify as an Incentive Stock
Option or (iii) any Award intended to comply with, or
qualify for an exception to, Section 409A of the Code.
Common Shares issued pursuant to this Plan may be either
authorized but unissued shares, treasury shares, reacquired
shares or any combination thereof. If any Common Shares issued
pursuant to an Award are forfeited or cancelled, then such
Common Shares that are forfeited or cancelled shall be or become
available for issuance under this Plan. Common Shares
(i) delivered in payment of the exercise price of a Stock
Option, (ii) not issued upon settlement of a Stock
Appreciation Right or (iii) delivered to or withheld by the
Company to pay withholding taxes shall not become available for
issuance under the Plan.
(c) Rights with Respect to Common Shares and
Other Securities. Except as provided in
subsection 8(c) hereof with respect to Awards of Restricted
Stock and unless otherwise determined by the Committee, in its
sole discretion, a Participant to whom an Award is made (and any
Person succeeding to such a Participants rights pursuant
to this Plan) shall have no rights as a stockholder with respect
to any Common Shares or as a holder with respect to other
securities, if any, issuable pursuant to any such Award until
the date a stock certificate evidencing such Common Shares or
other evidence of ownership is issued to such Participant or
until the Participants ownership of such Common Shares
shall have been entered into the books of the registrar in the
case of uncertificated shares.
Section 6. Stock Options. The
Committee may grant Stock Options; provided, that an
Incentive Stock Option may be granted only to Eligible Persons
who are employees of Black Box or any parent or subsidiary
of Black Box within the meaning of Code Sections 424
(e) and (f), including a subsidiary which becomes such
after adoption of the Plan. Each Stock Option granted under this
Plan shall be evidenced by an agreement in such form as the
Committee shall prescribe, from time to time, in accordance with
this Plan and shall comply with the applicable terms and
conditions of this section and this Plan and with such other
terms and conditions, including, but not limited to,
restrictions upon the Stock Option or the Common Shares issuable
upon exercise thereof, as the Committee, in its sole discretion,
shall establish.
(a) The exercise price of a Stock Option shall not
be less than the Fair Market Value of the Common Shares subject
to such Stock Option on the date of grant of the Stock Option,
as determined by the Committee; provided, however,
that if an Incentive Stock Option is granted to a Ten
Percent Employee, such exercise price shall not be less
than 110% of such Fair Market Value at the time the Stock Option
is granted. Unless otherwise determined by the Committee in the
documentation evidencing its approval action, the exercise price
of a Stock Option shall be equal to 100% of the Fair Market
Value of the Common Shares subject to such Stock Option on the
date of grant of such Stock Option or, in the case of an
Incentive Stock Option granted to a Ten Percent Employee,
shall be 110% of such Fair Market Value of the Common Shares
subject to such Stock Option on the date of grant of such Stock
Option.
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(b) On or before the date of grant of the Stock
Option, the Committee shall determine the number of Common
Shares to be subject to each Stock Option and shall identify the
name of the Eligible Person to receive such Stock Option.
(c) Any Stock Option may be exercised during its
term only at such time or times and in such installments as the
Committee may establish.
(d) A Stock Option shall not be exercisable:
(i) in the case of any Incentive Stock Option
granted to a Ten Percent Employee, after the expiration of
five (5) years from the date it is granted, and, in the
case of any other Stock Option, after the expiration of ten
(10) years from the date it is granted; and
(ii) unless payment in full is made for the shares
being acquired under such Stock Option at the time of exercise
as provided in subsection 6(g) hereof.
(e) In the case of an Incentive Stock Option, the
amount of the aggregate Fair Market Value of Common Shares
(determined at the time of grant of the Stock Option) with
respect to which incentive stock options are exercisable for the
first time by an employee of the Company during any calendar
year (under all such plans of his or her employer corporation
and its parent and subsidiary corporations) shall not exceed
$100,000 or such other amount as is specified in the Code.
(f) It is the intent of Black Box that
Nonqualified Stock Options granted under this Plan not be
classified as Incentive Stock Options, that the Incentive Stock
Options granted under this Plan be consistent with and contain
or be deemed to contain all provisions required under
Section 422 and the other appropriate provisions of the
Code and any implementing Treasury Regulations (and any
successor provisions thereof) and that any ambiguities in
construction shall be interpreted in order to effectuate such
intent. If a Stock Option is intended to be an Incentive Stock
Option, and if for any reason such Stock Option (or portion
thereof) shall not qualify as an Incentive Stock Option, then,
to the extent of such nonqualification, such Stock Option (or
portion thereof) shall be regarded as a Nonqualified Stock
Option granted under this Plan; provided, that such Stock
Option (or portion thereof) otherwise complies with this
Plans requirements relating to Nonqualified Stock Options.
In no event shall any member of the Committee or the Company (or
its employees, officers or directors) have any liability to any
Participant (or any other Person) due to the failure of a Stock
Option to qualify for any reason as an Incentive Stock Option.
(g) For purposes of payments made to exercise Stock
Options, such payment shall be made in such form (including, but
not limited to, cash, Common Shares, the surrender of another
outstanding Award under this Plan, broker-assisted cashless
exercise or any combination thereof) as the Committee may
determine, in its sole discretion. Stock Options granted under
this Plan shall be exercised by the Participant as to all or
part of the Common Shares covered thereby by the giving of
written notice of the exercise thereof to the Company at the
principal business office of the Company, specifying the number
of Common Shares to be purchased and specifying a business day
not more than fifteen (15) days from the date such notice
is given for the payment of the purchase price against delivery
of the Common Shares being purchased.
Section 7. Stock Appreciation
Rights. The Committee may grant Stock
Appreciation Rights. Each Award of Stock Appreciation Rights
granted under this Plan shall be evidenced by an agreement in
such form as the Committee shall prescribe, from time to time,
in accordance with this Plan and shall comply with the
applicable terms and conditions of this section and this Plan
and with such other terms and conditions, including, but not
limited to, restrictions upon the Award of Stock Appreciation
Rights or any Common Shares issuable upon exercise thereof, as
the Committee, in its sole discretion, shall establish.
(a) The Committee shall determine the number of
Common Shares to be subject to each Award of Stock Appreciation
Rights.
(b) Any Stock Appreciation Right may be exercised
during its term only at such time or times and in such
installments as the Committee may establish and shall not be
exercisable after the expiration of ten (10) years from the
date it is granted.
I-3
(c) An Award of Stock Appreciation Rights shall
entitle the holder to exercise such Award and to receive from
Black Box in exchange thereof, without payment to Black
Box, that number of Common Shares (or cash, Other Black
Box Securities or property, or other forms of payment, or
any combination thereof, as determined by the Committee and as
set forth in the agreement evidencing such Award of Stock
Appreciation Rights) having an aggregate value equal to the
excess of the Fair Market Value of one (1) Common Share, at
the time of such exercise, over the exercise price times the
number of Common Shares subject to the Award that are so
exercised. Stock Appreciation Rights shall have an exercise
price no less than the Fair Market Value of the Common Shares
covered by the right on the date of grant. Unless otherwise
determined by the Committee in the documentation evidencing its
approval action, the exercise price of a Stock Appreciation
Right shall be equal to 100% of the Fair Market Value of the
Common Shares subject to such Stock Appreciation Right on the
date of grant of the Stock Appreciation Right.
(d) A Stock Appreciation Right may provide that it
shall be deemed to have been exercised at the close of business
on the business day preceding the expiration date of the Stock
Appreciation Right or of the related Stock Option (or other
Award), or such other date as specified by the Committee, if at
such time such Stock Appreciation Right has a positive value.
Such deemed exercise shall be settled or paid in Common Shares
in accordance with subsection 7(c) hereof.
Section 8. Restricted Stock and Restricted Stock
Units. The Committee may grant Awards of
Restricted Stock and Restricted Stock Units. Each Award of
Restricted Stock or Restricted Stock Units under this Plan shall
be evidenced by an agreement in such form as the Committee shall
prescribe, from time to time, in accordance with this Plan and
shall comply with the applicable terms and conditions of this
section and this Plan and with such other terms and conditions
as the Committee, in its sole discretion, shall establish.
(a) The Committee shall determine the number of
Common Shares to be issued to a Participant pursuant to the
Award of Restricted Stock or Restricted Stock Units, and the
extent, if any, to which they shall be issued in exchange for
cash, other consideration or both.
(b) Until the expiration of such period as the
Committee shall determine from the date on which the Award is
granted and subject to such other terms and conditions as the
Committee, in its sole discretion, shall establish (the
Restricted Period), a Participant to whom an
Award of Restricted Stock is made shall be issued, but shall not
be entitled to the delivery of, a stock certificate or other
evidence of ownership representing the Common Shares subject to
such Award. The standard vesting schedule applicable to Awards
of Restricted Stock and Restricted Stock Units shall provide for
vesting of such Awards, in one or more increments, over a
service period of not less than three (3) years;
provided, however, that this limitation shall not
(i) apply to Awards granted to non-employee directors of
the Board that are received pursuant to the Companys
compensation program applicable to non-employee directors of the
Board, (ii) apply to Awards for Restricted Stock or
Restricted Stock Units under this Section 8 together with
Full-Value Awards under Section 10 hereof for up to an
aggregate of 10% of the maximum number of Common Shares that may
be issued under this Plan or (iii) adversely affect a
Participants rights under another plan or agreement with
the Company.
(c) Unless otherwise determined by the Committee, in
its sole discretion, a Participant to whom an Award of
Restricted Stock has been made (and any Person succeeding to
such Participants rights pursuant to this Plan) shall
have, after issuance of a certificate for the number of Common
Shares awarded (or after the Participants ownership of
such Common Shares shall have been entered into the books of the
registrar in the case of uncertificated shares) and prior to the
expiration of the Restricted Period, ownership of such Common
Shares, including the right to vote such Common Shares and to
receive dividends or other distributions made or paid with
respect to such Common Shares (provided, that such Common
Shares, and any new, additional or different shares, or Other
Black Box Securities or property or other forms of
consideration that the Participant may be entitled to receive
with respect to such Common Shares as a result of a stock split,
stock dividend or any other change in the capital structure of
Black Box shall be subject to the restrictions set forth in
this Plan as determined by the Committee, in its sole
discretion) subject, however, to the restrictions and
limitations imposed thereon pursuant to this Plan.
I-4
(d) The Committee may grant Associated Awards of
Dividend Equivalents to Participants in connection with Awards
of Restricted Stock Units. The Committee may provide, at the
date of grant, that Dividend Equivalents shall be paid or
distributed when accrued or shall be deemed to have been
reinvested in additional Common Shares or other investment
vehicles as the Committee may specify; provided, that,
unless otherwise determined by the Committee, Dividend
Equivalents shall be subject to all conditions and restrictions
of the underlying Restricted Stock Units to which they relate.
Section 9. Performance Grants.
(a) Grant. Subject to the
limitations set forth in Section 5(b) hereof, the Committee
shall have sole and complete authority to determine the Eligible
Persons who shall receive a Performance Grant which shall
consist of a right that is (i) denominated in cash, Common
Shares or any other form of Award issuable under this Plan (or
any combination thereof), (ii) valued, as determined by the
Committee, in accordance with the achievement of such
performance goals during such performance periods as the
Committee shall establish and (iii) payable at such time
and in such form as the Committee shall determine. Unless
otherwise determined by the Committee, any such Performance
Grant shall be evidenced by an Award agreement containing the
terms of the Award, including, but not limited to, the
performance criteria and such terms and conditions as may be
determined, from time to time, by the Committee, in each case,
not inconsistent with this Plan. In relation to any Performance
Grant, the performance period may consist of one or more
calendar years or other fiscal period of at least 12 months
in length for which performance is being measured.
(b) Terms and Conditions. For
Awards intended to be performance-based compensation under
Section 162(m) of the Code, Performance Grants shall be
conditioned upon the achievement of pre-established goals
relating to one or more of the following performance measures,
as determined in writing by the Committee and subject to such
modifications as specified by the Committee: cash flow; cash
flow from operations; earnings (including earnings before
interest, taxes, depreciation and amortization or some variation
thereof); earnings per share, diluted or basic; earnings per
share from continuing operations; days sales outstanding; net
asset turnover; inventory turnover; capital expenditures; debt;
debt reduction; working capital; return on investment; return on
sales; net or gross sales; market share; economic value added;
cost of capital; change in assets; expense reduction levels;
productivity; delivery performance; stock price; return on
equity; total or relative increases to stockholder return;
return on capital; return on assets or net assets; revenue;
income or net income; operating income or net operating income;
operating profit or net operating profit; gross margin,
operating margin or profit margin; and completion of
acquisitions, business expansion, product diversification and
other non-financial operating and management performance
objectives. To the extent consistent with Section 162(m) of
the Code, the Committee may determine, at the time the
performance goals are established, that certain adjustments
shall apply, in whole or in part, in such manner as determined
by the Committee, to exclude the effect of any of the following
events that occur during a performance period: the impairment of
tangible or intangible assets; litigation or claim judgments or
settlements; the effect of changes in tax law, accounting
principles or other such laws or provisions affecting reported
results; business combinations, reorganizations
and/or
restructuring programs, including, but not limited to,
reductions in force and early retirement incentives; currency
fluctuations; and any extraordinary, unusual, infrequent or
non-recurring items, including, but not limited to, such items
described in managements discussion and analysis of
financial condition and results of operations or the financial
statements and notes thereto appearing in Black Boxs
annual report to stockholders for the applicable fiscal year.
Performance measures may be determined either individually,
alternatively or in any combination, applied to either the
Company as a whole or to a business unit or subsidiary entity
thereof, either individually, alternatively or in any
combination, and measured over a period of time including any
portion of a year, annually or cumulatively over a period of
years, on an absolute basis or relative to a pre-established
target, to previous fiscal years results or to a
designated comparison group, in each case as specified by the
Committee.
(c) Preestablished Performance
Goals. For Awards intended to be
performance-based compensation under Section 162(m) of the
Code, performance goals relating to the performance measures set
forth above shall be preestablished in writing by the Committee,
and achievement thereof certified in writing prior to payment of
the Award, as required by Section 162(m) and Treasury
Regulations promulgated thereunder. All such performance goals
shall be established in writing no later than ninety
(90) days after the beginning of the
I-5
applicable performance period; provided, however,
that for a performance period of less than one (1) year,
the Committee shall take any such actions prior to the lapse of
25% of the performance period. In addition to establishing
minimum performance goals below which no compensation shall be
payable pursuant to a Performance Grant, the Committee, in its
sole discretion, may create a performance schedule under which
an amount less than or more than the target award may be paid so
long as the performance goals have been achieved.
(d) Additional Restrictions/Negative
Discretion. The Committee, in its sole
discretion, may also establish such additional restrictions or
conditions that must be satisfied as a condition precedent to
the payment of all or a portion of any Performance Grants. Such
additional restrictions or conditions need not be
performance-based and may include, among other things, the
receipt by a Participant of a specified annual performance
rating, the continued employment by the Participant
and/or the
achievement of specified performance goals by the Company,
business unit or Participant. Furthermore, and notwithstanding
any provision of this Plan to the contrary, the Committee, in
its sole discretion, may retain the discretion to reduce the
amount of any Performance Grant payable in cash to a Participant
if it concludes that such reduction is necessary or appropriate
based upon: (i) an evaluation of such Participants
performance, (ii) comparisons with compensation received by
other similarly-situated individuals working within the
Companys industry, (iii) the Companys financial
results and conditions or (iv) such other factors or
conditions that the Committee deems relevant; provided,
however, the Committee shall not use its discretionary
authority to increase any Award that is intended to be
performance-based compensation under Section 162(m) of the
Code.
(e) Payment of Performance
Awards. Performance Grants may be paid in a lump
sum or in installments following the close of the performance
period or, in accordance with procedures established by the
Committee, on a deferred basis.
Section 10. Other Share-Based
Awards. The Committee shall have authority to
grant to Eligible Persons Other Share-Based Awards, which shall
consist of any right that is (i) not an Award described in
Sections 6 through 9 hereof and (ii) an Award of
Common Shares or an Award denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or
related to, Common Shares (including, without limitation,
securities convertible into Common Shares), as deemed by the
Committee to be consistent with the purposes of this Plan.
Subject to the terms of this Plan and any applicable Award
agreement, the Committee shall determine the terms and
conditions of any such Other Share-Based Award. The standard
vesting schedule applicable to any Full-Value Award shall
provide for vesting of such Full-Value Award, in one or more
increments, over a service period of not less than three
(3) years; provided, however, that this limitation
shall not (i) apply to Awards granted to non-employee
directors of the Board that are received pursuant to the
Companys compensation program applicable to non-employee
directors of the Board, (ii) apply to Awards for Restricted
Stock or Restricted Stock Units under Section 8 hereof
together with Full-Value Awards under this Section 10 for
up to an aggregate of 10% of the maximum number of Common Shares
that may be issued under this Plan or (iii) adversely
affect a Participants rights under another plan or
agreement with the Company.
Section 11. Termination of
Employment. Upon termination of employment of
any employee with the Company, or cessation of a directors
service on the Board, an Award previously granted to the
employee or director, as the case may be, unless otherwise
specified by the Committee in the agreement evidencing such
Award and, to the extent not inconsistent with Section 16
hereof, shall, to the extent not theretofore exercised with
respect to any Stock Options or Stock Appreciation Rights, or to
the extent that any of the designated goals (including any
service period) have not been achieved within the designated
period prior to the lapse of any restrictions or vesting of any
other Award, such Award shall become null and void and shall be
forfeited, provided, that:
(a) if the employee or director shall die while in
the employ of the Company or while serving on the Board or
during either the three (3) month or one (1) year
period, whichever is applicable, specified in clause (b)
below and at a time when such employee or director was entitled
to exercise such Stock Option or Stock Appreciation Right as
herein provided, the legal representative of such employee or
director, or such person who acquired such Award by bequest or
inheritance or by reason of the death of the employee or
director, may, not later than one (1) year from the date of
death, exercise such Award, to the extent not theretofore
exercised, as specified by the Committee in the agreement
evidencing such Award;
I-6
(b) if the employment of an employee or the service
of a director to whom a Stock Option or Stock Appreciation Right
shall have been granted shall terminate by reason of the
employees or directors retirement (at such age or
upon such conditions as shall be specified by the Board),
disability (as described in Section 22(e)(3) of the Code)
or dismissal of the employee by the employer or removal of the
director other than for cause (as defined below), and while such
employee or director is entitled to exercise such Stock Option
or Stock Appreciation Right as herein provided, such employee or
director shall have the right to exercise such Stock Option or
Stock Appreciation Right so granted, to the extent not
theretofore exercised, in respect of any or all of such number
of Common Shares as specified by the Committee in such Stock
Option or Stock Appreciation Right, at any time up to and
including (i) three (3) months after the date of such
termination of employment or service as a director in the case
of termination by reason of retirement or dismissal other than
for cause and (ii) one (1) year after the date of
termination of employment or service as a director in the case
of termination by reason of disability; and
(c) if the employment of an employee or the service
of a director to whom an Award of Restricted Stock or Restricted
Stock Units, Performance Grant or Other Share-Based Award shall
have been granted shall terminate by reason of the
employees or directors death, retirement (at such
age or upon such conditions as shall be specified by the Board)
or disability (as described in Section 22(e)(3) of the
Code), and prior to the forfeiture of such Award, such Award
shall vest and all restrictions shall lapse as of the date of
such employees or directors death, retirement or
disability.
If an employee voluntarily terminates his or her employment, or
if a director voluntarily terminates his or her service on the
Board, or is discharged for cause, any Award granted hereunder
shall, unless otherwise specified by the Committee in the
agreement evidencing such Award, forthwith terminate and be
forfeited with respect to any unexercised or unvested portion
thereof.
If a Stock Option or Stock Appreciation Right granted hereunder
shall be exercised by the legal representative of a deceased or
disabled employee or director or former employee or director, or
by a person who acquired a Stock Option or Stock Appreciation
Right granted hereunder by bequest or inheritance or by reason
of death of any employee or director or former employee or
director, written notice of such exercise shall be accompanied
by a certified copy of letters testamentary or equivalent proof
of the right of such legal representative or other person to
exercise such Stock Option or Stock Appreciation Right.
For purposes of this Plan, the term for cause shall
mean (i) with respect to an employee or director who is
party to a written agreement with, or, alternatively,
participates in a compensation or benefit plan of the Company,
which agreement or plan contains a definition of for
cause or cause (or words of like import) for
purposes of termination of employment or service as a director
thereunder by the Company, for cause or
cause as defined in the most recent of such
agreements or plans or (ii) in all other cases,
(a) the willful commission by an employee or director of a
criminal or other act that causes substantial economic damage to
the Company or substantial injury to the business reputation of
the Company; (b) the commission by an employee or director
of an act of fraud in the performance of such employees or
directors duties on behalf of the Company or (c) the
continuing willful failure of an employee or director to perform
the duties of such employee or director to the Company (other
than such failure resulting from the employees or
directors incapacity due to physical or mental illness)
after written notice thereof (specifying the particulars thereof
in reasonable detail) and a reasonable opportunity to be heard
and cure such failure are given to the employee or director by
the Board or the Committee. For purposes of this Plan, no act or
failure to act on the employees or directors part
shall be considered willful unless done or omitted
to be done by the employee or director not in good faith and
without reasonable belief that the employees or
directors action or omission was in the best interests of
the Company.
For purposes of this Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at
the time of the determination, the individual was an
employee of such corporation for purposes of
Section 422(a) of the Code. If an individual is on
military, sick leave or other bona fide leave of absence, such
individual shall be considered an employee for
purposes of the exercise of a Stock Option or Stock Appreciation
Right and shall be entitled to exercise such a Stock Option or
Stock Appreciation Right during such leave if the period of such
leave does not exceed ninety (90) days, or, if longer, so
long as the individuals right to reemployment with the
corporation granting the option (or a related corporation) is
guaranteed either by statute or by contract. If
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the period of leave exceeds ninety (90) days, the
employment relationship shall be deemed to have terminated on
the ninety-first (91st) day of such leave, unless the
individuals right to reemployment is guaranteed by statute
or contract.
A termination of employment shall not be deemed to occur by
reason of (i) the transfer of an employee from employment
by Black Box to employment by a subsidiary corporation or a
parent corporation of Black Box or (ii) the transfer
of an employee from employment by a subsidiary corporation or a
parent corporation of Black Box to employment by Black
Box or by another subsidiary corporation or parent
corporation of Black Box. Furthermore, solely for purposes of
determining the rights and obligations under any outstanding
Awards theretofore granted, in the event that Black
Box ceases to own, directly or indirectly, stock possessing
50% or more of the total combined voting power of all classes of
stock of a subsidiary company by virtue of a recapitalization,
stock dividend, stock split,
split-up,
spin-off, combination of shares or other like change in capital
structure of Black Box, the Committee may determine that
employment by such former subsidiary (or any parent or
subsidiary company of such subsidiary) shall continue to be
deemed to be employment by the Company for purposes of this Plan.
In the event of the complete liquidation or dissolution of a
subsidiary corporation, or in the event that Black
Box ceases to own, directly or indirectly, stock possessing
50% or more of the total combined voting power of all classes of
stock of such corporation (except as provided in the preceding
paragraph), any unexercised Stock Option or Stock Appreciation
Right, any unvested Award and any Award for which restrictions
have not lapsed theretofore granted to any person employed by
such subsidiary corporation will be deemed canceled and
forfeited unless such person is employed by Black Box or by
any parent corporation or subsidiary corporation of Black
Box after the occurrence of such event. In the event a
Stock Option or Stock Appreciation Right is to be canceled
pursuant to the provisions of the previous sentence, notice of
such cancellation will be given to each employee holding such
unexercised Stock Option or Stock Appreciation Right and such
holder will have the right to exercise such Stock Option or
Stock Appreciation Right in full during the thirty (30) day
period following notice of such cancellation.
Notwithstanding anything to the contrary contained in this
Section 11 hereof, in no event, however, shall any person
be entitled to exercise any Stock Option or Stock Appreciation
Right after the expiration of the period of exercisability of
such Stock Option or Stock Appreciation Right as specified
therein.
Section 12. Transferability of
Awards. A Participants rights and
interest under this Plan or any Award may not be assigned or
transferred, hypothecated or encumbered, in whole or in part,
either directly or by operation of law or otherwise, including,
but not by way of limitation, by execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner;
provided, however, the Committee may permit such transfer
to a Permitted Transferee; and provided, further,
that, unless otherwise permitted by the Code, any Incentive
Stock Option granted pursuant to this Plan shall not be
transferable other than by will or by the laws of descent and
distribution and shall be exercisable during the
Participants lifetime only by Participant or by such
Permitted Transferee.
Section 13. Amendment or Substitution of Awards
under this Plan; Change in Control. The terms
of any outstanding Award under this Plan may be amended or
modified from time to time by the Committee, in its sole
discretion, in any manner that it deems appropriate (including,
but not limited to, acceleration of the date of exercise of any
Award or the payment under any Award) if the Committee could
grant such amended or modified Award under the terms of this
Plan at the time of such amendment or modification;
provided, that no such amendment or modification shall:
(i) accelerate the vesting or exercisability of any Award,
other than in connection with a Participants death,
disability (as described in Section 22(e)(3) of the Code),
retirement (at such age or upon such conditions as shall be
specified by the Board) or a
change-in-control
or other transaction contemplated by this Section 13;
provided, further, that the foregoing limitation shall
not apply to any Performance Grant the payment of which remains
contingent upon the attainment of the performance goal or
(ii) adversely affect in a material manner any right of a
Participant under the Award without his or her written consent.
Notwithstanding the foregoing or any provision of an Award to
the contrary, the Committee may at any time (without the consent
of any Participant) modify, amend or terminate any or all of the
provisions of an Award to the extent necessary to conform the
provisions of the Award with Section 162(m),
Section 409A or any other provision of the Code or other
applicable law, the Treasury Regulations issued thereunder or an
exception thereto, regardless of whether such modification,
amendment or termination of the Award shall adversely affect the
rights of a Participant. The Committee may, in its
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sole discretion and, to the extent not inconsistent with
Section 16 hereof, permit holders of Awards under this Plan
to surrender outstanding Awards in order to exercise or realize
the rights under other Awards, or in exchange for the grant of
new Awards, or require holders of Awards to surrender
outstanding Awards as a condition precedent to the grant of new
Awards under this Plan.
Notwithstanding any provision of this Plan to the contrary,
except in the event of a
change-in-control
or a dividend (other than a regular cash dividend) or other
distribution (whether in the form of cash, Common Shares, Other
Black Box Securities or other property), recapitalization,
stock split, reverse stock split, reorganization, merger,
consolidation,
split-up,
spin-off, combination, repurchase or exchange of Common Shares
or Other Black Box Securities, issuance of warrants or
other rights to purchase Common Shares or Other Black
Box Securities or other similar corporate transaction or
event that affects the Common Shares such that an adjustment is
necessary in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under this Plan, the terms of outstanding Awards may not be
amended to reduce the exercise price of outstanding Stock
Options or Stock Appreciation Rights or cancel or surrender
outstanding Stock Options or Stock Appreciation Rights in
exchange for cash, other Awards or Stock Options or Stock
Appreciation Rights with an exercise price that is less than the
exercise price of the original Stock Options or Stock
Appreciation Rights without stockholder approval.
In the event of a
change-in-control
of Black Box and to the extent not inconsistent with
Section 16 hereof, all then outstanding Awards shall
immediately become exercisable and shall vest and all
restrictions shall lapse. For purposes of this Plan, a
change-in-control
of the Company occurs if: (i) any Person (as
such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act) is or becomes the beneficial owner (as
defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, of securities
of the Company representing (a) 50% or more of the combined
voting power of the Companys then-outstanding securities
or (b) 25% or more but less than 50% of the combined voting
power of the Companys then-outstanding securities if such
transaction(s) giving rise to such beneficial ownership are not
approved by the Board, (ii) at any time a majority of the
members of the Board consists of individuals other than
individuals who were nominated by members of the Board or
(iii) the Board shall approve a sale of all or
substantially all of the assets of the Company or any merger,
consolidation, issuance of securities or purchase of assets, the
result of which would be the occurrence of any event described
in clause (i) or (ii) above. Notwithstanding the
foregoing or any provision of this Plan to the contrary, if an
Award is subject to Section 409A (and not excepted
therefrom) and a
change-in-control
is a distribution event for purposes of an Award, the foregoing
definition of
change-in-control
shall be interpreted, administered and construed in a manner
necessary to ensure that the occurrence of any such event shall
result in a
change-in-control
only if such event qualifies as a change in the ownership or
effective control of a corporation, or a change in the ownership
of a substantial portion of the assets of a corporation, as
applicable, within the meaning of Treas. Reg.
§1.409A-3(i)(5).
The Committee, in its sole discretion and to the extent not
inconsistent with Section 16 hereof, may determine that,
upon the occurrence of a transaction described in the preceding
paragraph, that each Award outstanding hereunder shall terminate
within a specified number of days after notice to the holder,
and such holder shall receive, with respect to each such Award,
cash in an amount equal to the fair market value of such Award
(if any) as determined by the Committee, in its sole discretion.
Section 14. Dilution and Other
Adjustments. In the event a dividend (other
than a regular cash dividend) or other distribution (whether in
the form of cash, Common Shares, Other Black Box Securities
or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation,
split-up,
spin-off, combination, repurchase or exchange of Common Shares
or Other Black Box Securities, issuance of warrants or
other rights to purchase Common Shares or Other Black
Box Securities or other similar corporate transaction or
event affects the Common Shares such that an adjustment is
necessary in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under this Plan, then the Committee shall, in an equitable
manner, (i) adjust any or all of (a) the aggregate
maximum number of Common Shares or Other Black
Box Securities (or number and kind of other securities or
property) with respect to which Awards may be granted under this
Plan pursuant to Section 5(b) hereof, (b) the
individual maximum number of Common Shares that may be granted
as Stock Options, Stock Appreciation Rights and Performance
Grants (denominated in Common Shares) to a Participant pursuant
to Section 5(b) of this Plan, (c) the number of Common
Shares or Other Black Box Securities (or number and kind of
other securities or property) subject to outstanding Awards and
(d) the grant or exercise price
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with respect to any outstanding Award, (ii) if deemed
appropriate, provide for an equivalent Award or substitute Award
in respect of securities of the surviving entity of any merger,
consolidation or other transaction or event having a similar
effect or (iii) if deemed appropriate, make provision for a
cash payment to the holder of an outstanding Award;
provided, that, in each case, any such adjustment shall
be performed in accordance with the applicable provisions of
Code and the Treasury Regulations issued thereunder so as to not
affect the status of: (A) any Award intended to qualify as
performance-based compensation under Section 162(m) of the
Code, (B) any Award intended to qualify as an Incentive
Stock Option under Section 422 of the Code or (C) any
Award intended to comply with, or qualify for an exception to,
Section 409A of the Code. Unless otherwise provided by the
Committee, all outstanding Awards shall terminate immediately
prior to the consummation of any dissolution or liquidation of
the Company. Any such termination or adjustment made by the
Committee will be final, conclusive and binding for all purposes
of this Plan.
Section 15. Time of Granting of an
Award. The date of grant of an Award shall,
for all purposes, be the date on which the Committee approves
such Award, or such other later date as determined by the
Committee at the time of such approval. Notice of the approval
shall be given to each Participant to whom an Award is granted
within a reasonable time after the date of the grant.
Section 16. Section 409A. Notwithstanding
any provision of the Plan or an Award agreement to the contrary,
if any Award or benefit provided under this Plan is subject to
the provisions of Section 409A, the provisions of the Plan
and any applicable Award agreement shall be administered,
interpreted and construed in a manner necessary to comply with
Section 409A or an exception thereto (or disregarded to the
extent such provision cannot be so administered, interpreted or
construed), and the following provisions shall apply, as
applicable:
(a) If a Participant is a Specified Employee and a
payment subject to Section 409A (and not excepted
therefrom) to the Participant is due upon Separation from
Service, such payment shall be delayed for a period of six
(6) months after the date of the Participants
Separation from Service (or, if earlier, the death of the
Participant). Any payment that would otherwise have been due or
owing during such six-month period will be paid immediately
following the end of the six-month period in the month following
the month containing the
6-month
anniversary of the date of termination unless another compliant
date is specified in the applicable Award agreement.
(b) For purposes of Section 409A, and to the
extent applicable to any Award or benefit under the Plan, it is
intended that distribution events qualify as permissible
distribution events for purposes of Section 409A and shall
be interpreted and construed accordingly. With respect to
payments subject to Section 409A, the Company reserves the
right to accelerate
and/or defer
any payment to the extent permitted and consistent with
Section 409A. Whether and when a Separation from Service or
termination of employment of a Participant has occurred will be
determined based on all of the facts and circumstances and, to
the extent applicable to any Award or benefit, in accordance
with the guidance issued under Section 409A. For this
purpose, a Participant will be presumed to have experienced a
Separation from Service when the level of bona fide
services performed permanently decreases to a level less
than twenty percent (20%) of the average level of bona fide
services performed during the immediately preceding
thirty-six (36) month period or such other applicable
period as provided by Section 409A.
(c) The Committee, in its discretion, may specify
the conditions under which the payment of all or any portion of
any Award may be deferred until a later date. Deferrals shall be
for such periods or until the occurrence of such events, and
upon such terms and conditions, as the Committee shall determine
in its discretion, in accordance with the provisions of
Section 409A; provided, however, that no deferral
shall be permitted with respect to Options and other stock
rights subject to Section 409A. An election shall be made
by filing an election with the Company (on a form provided by
the Company) on or prior to December 31st of the
calendar year immediately preceding the beginning of the
calendar year (or other applicable service period) to which such
election relates (or at such other date as may be specified by
the Committee to the extent consistent with Section 409A)
and shall be irrevocable for such applicable calendar year (or
other applicable service period).
(d) The grant of Nonqualified Stock Options, Stock
Appreciation Rights and other stock rights subject to
Section 409A shall be granted under terms and conditions
consistent with Treas. Reg. §1.409A-1(b)(5) such
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that any such Award does not constitute a deferral of
compensation under Section 409A. Accordingly, any such
Award may be granted to Eligible Persons of Black Box and
its subsidiaries and affiliates in which Black Box has a
controlling interest. In determining whether Black Box has
a controlling interest, the rules of Treas. Reg.
§1.414(c)-2(b)(2)(i) shall apply; provided, that the
language at least 50 percent shall be used
instead of at least 80 percent in each place it
appears; provided, further, where legitimate business
reasons exist (within the meaning of Treas. Reg.
§1.409A-1(b)(5)(iii)(E)(i)), the language at least
20 percent shall be used instead of at least
80 percent in each place it appears. The rules of
Treas. Reg. §§1.414(c)-3 and 1.414(c)-4 shall apply
for purposes of determining ownership interests.
(e) In no event shall any member of the Board, the
Committee or the Company (or its employees, officers or
directors) have any liability to any Participant (or any other
Person) due to the failure of an Award to satisfy the
requirements of Section 409A.
Section 17. Miscellaneous Provisions.
(a) Any proceeds from Awards shall constitute
general funds of the Company.
(b) No fractional shares may be delivered under an
Award, but in lieu thereof, a cash or other adjustment may be
made as determined by the Committee, in its sole discretion.
(c) No Eligible Person or other Person shall have
any claim or right to be granted an Award under this Plan.
Determinations made by the Committee under this Plan need not be
uniform and may be made selectively among Eligible Persons under
this Plan, whether or not such Eligible Persons are similarly
situated. Neither this Plan nor any action taken under this Plan
shall be construed as giving any Eligible Person any right to
continue to be employed by or perform services for the Company,
and the right to terminate the employment of or performance of
services by Eligible Persons at any time and for any reason is
specifically reserved by the Company.
(d) No Participant or other Person shall have any
right with respect to this Plan, the Common Shares reserved for
issuance under this Plan or in any Award, contingent or
otherwise, until written evidence of the Award shall have been
delivered to the Participant and all of the terms, conditions
and provisions of this Plan and the Award applicable to such
Participant (and each Person claiming under or through him or
her) have been met.
(e) Notwithstanding anything to the contrary
contained in this Plan or in any Award agreement, each Award
shall be subject to the requirement, if at any time the
Committee shall determine, in its sole discretion, that such
requirement shall apply, that the listing, registration or
qualification of any Award under this Plan, or of the Common
Shares, Other Black Box Securities or property or other
forms of payment issuable pursuant to any Award under this Plan,
on any stock exchange or other market quotation system or under
any federal or state law, or the consent or approval of any
government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Award
or the exercise or settlement thereof, such Award shall not be
granted, exercised or settled in whole or in part until such
listing, registration, qualification, consent or approval shall
have been effected, obtained and maintained free of any
conditions not acceptable to the Committee. Notwithstanding
anything to the contrary contained in this Plan or in any Award
agreement, no Common Shares, Other Black Box Securities or
property or other forms of payment shall be issued under this
Plan with respect to any Award unless the Committee shall be
satisfied that such issuance will be in compliance with
applicable law and any applicable rules of any stock exchange or
other market quotation system on which such Common Shares are
listed. If the Committee determines that the exercise of any
Stock Option or Stock Appreciation Right would fail to comply
with any applicable law or any applicable rules of any stock
exchange or other market quotation system on which Common Shares
are listed, the Participant holding such Stock Option or Stock
Appreciation Right shall have no right to exercise such Stock
Option or Stock Appreciation Right until such time as the
Committee shall have determined that such exercise will not
violate any applicable law or any such applicable rule, provided
that such Stock Option or Stock Appreciation Right shall not
have expired prior to such time.
(f) To the extent applicable, it is the intent of
Black Box that this Plan and Awards hereunder comply in all
respects with
Rule 16b-3
and Sections 162(m), 409A and 422, and (i) the
provisions of this Plan shall be
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administered, interpreted and construed in a manner necessary to
comply with
Rule 16b-3
and Sections 162(m), 409A and 422, the Treasury Regulations
issued thereunder or an exception thereto (or disregarded to the
extent this Plan cannot be so administered, interpreted or
construed) and (ii) in no event shall any member of the
Committee or the Company (or its employees, officers or
directors) have any liability to any Participant (or any other
Person) due to the failure of an Award to satisfy the
requirements of
Rule 16b-3
and Sections 162(m), 409A and 422.
(g) The Company shall have the right to deduct from
any payment made under this Plan any federal, state, local or
foreign income or other taxes required by law to be withheld
with respect to such payment. It shall be a condition to the
obligation of Black Box to issue Common Shares, Other Black
Box Securities or property, other securities or property or
other forms of payment, or any combination thereof, upon
exercise, settlement or payment of any Award under this Plan,
that the Participant (or any Person entitled to act) pay to
Black Box, upon its demand, such amount as may be required by
the Company for the purpose of satisfying any liability to
withhold federal, state, local or foreign income or other taxes.
If the amount requested is not paid, Black Box may refuse
to issue Common Shares, Other Black Box Securities or
property, other securities or property or other forms of
payment, or any combination thereof. Notwithstanding anything in
this Plan to the contrary, the Committee may, in its sole
discretion, permit an Eligible Person (or any Person entitled to
act) to elect to pay a portion or all of the amount requested by
the Company for such taxes with respect to such Award, at such
time and in such manner as the Committee shall deem to be
appropriate (including, but not limited to, by authorizing Black
Box to withhold, or agreeing to surrender to Black
Box on or about the date such tax liability is
determinable, Common Shares, Other Black Box Securities or
property, other securities or property or other forms of
payment, or any combination thereof, owned by such Person or a
portion of such forms of payment that would otherwise be
distributed, or have been distributed, as the case may be,
pursuant to such Award to such Person, having a fair market
value equal to the amount of such taxes); provided, however,
that any broker-assisted cashless exercise shall comply with
the requirements for equity classification of Paragraph 35
of Statement of Financial Accounting Standards No. 123
(revised 2004) Share-Based Payment and any
withholding satisfied through a net-settlement shall be limited
to the minimum statutory withholding requirements.
(h) The expenses of this Plan shall be borne by the
Company; provided, however, the Company may recover from
a Participant or his or her Permitted Transferee, heirs or
assigns any and all damages, fees, expenses and costs incurred
by the Company arising out of any actions taken by a Participant
or Permitted Transferee in breach of this Plan or any agreement
evidencing such Participants Award.
(i) This Plan shall be unfunded. The Company shall
not be required to establish any special or separate fund or to
make any other segregation of assets to assure the payment of
any Award under this Plan, and rights to the payment of Awards
shall be no greater than the rights of the Companys
general creditors.
(j) By accepting any Award or other benefit under
this Plan, each Participant (and each Person claiming under or
through him or her) shall be conclusively deemed to have
indicated his or her acceptance and ratification of, and consent
to, any action taken under this Plan by the Company, the Board
or the Committee.
(k) The appropriate officers of the Company shall
cause to be filed any reports, returns or other information
regarding Awards under this Plan or any Common Shares or Other
Black Box Securities issued pursuant to this Plan as may be
required by applicable law and any applicable rules of any stock
exchange or other market quotation system on which such Common
Shares or Other Black Box Securities are listed.
(l) The validity, construction, interpretation,
administration and effect of this Plan, and of its rules and
regulations, and rights relating to this Plan and to Awards
granted under this Plan, shall be governed by the substantive
laws, but not the choice of law rules, of the State of Delaware.
(m) Records of the Company shall be conclusive for
all purposes under this Plan or any Award, unless determined by
the Committee to be incorrect.
(n) If any provision of this Plan or any Award is
held to be illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining provisions of this
Plan or any Award, but such provision shall be
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fully severable, and this Plan or Award, as applicable, shall be
construed and enforced as if the illegal or invalid provision
had never been included in this Plan or Award, as applicable.
(o) The terms of this Plan shall govern all Awards
under this Plan and in no event shall the Committee have the
power to grant any Award under this Plan that is contrary to any
of the provisions of this Plan.
(p) For purposes of interpretation of this Plan, the
masculine pronoun includes the feminine and the singular
includes the plural wherever appropriate.
Section 18. Plan Amendment or
Suspension. This Plan may be amended or
suspended in whole or in part at any time, from time to time, by
the Committee or by the Board; provided, that no
amendment shall be made without stockholder approval if such
approval is necessary to qualify for or comply with any tax or
regulatory requirement or other applicable law for which the
Committee or Board deems it necessary or desirable to qualify or
comply. No such amendment or suspension shall adversely affect
in a material manner any right of a Participant under an
outstanding Award without his or her written consent.
Notwithstanding the foregoing or any provision of an Award to
the contrary, the Board or the Committee may at any time
(without the consent of any Participant) modify, amend or
terminate any or all of the provisions of this Plan to the
extent necessary to conform the provisions of this Plan with
Section 162(m), Section 409A or any other provision of
the Code or other applicable law, the Treasury Regulations
issued thereunder or an exception thereto, regardless of whether
such modification, amendment or termination of this Plan shall
adversely affect the rights of a Participant. The Board may, in
its sole discretion, submit any amendment to this Plan to the
stockholders for approval.
Section 19. Plan
Termination. This Plan shall terminate upon
the earlier of the following dates or events to occur:
(a) upon the adoption of a resolution of the Board
terminating this Plan; or
(b) the tenth anniversary of the Board Approval Date.
No termination of this Plan shall materially alter or impair any
of the rights or obligations of any Participant, without his or
her written consent, under any Award previously granted under
this Plan, except, further, that subsequent to
termination of this Plan, the Committee may make amendments,
modifications or terminations of Awards permitted under
Section 13 hereof.
Section 20. Effective
Date. This Plan shall be effective, and
Awards may be granted under this Plan, on or after the Effective
Date.
Section 21. Governing
Law. This Plan and any Award granted under
this Plan as well as any determinations made or actions taken
under this Plan shall be governed by, and construed and enforced
in accordance with, the internal laws of the State of Delaware
without regard to its choice or conflicts of laws principles.
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APPENDIX A
Unless otherwise determined by the Committee in the applicable
Award agreement, the following terms shall have the meaning
indicated:
Associated Award shall mean an Award
granted concurrently or subsequently in conjunction with another
Award.
Award shall mean the grant of rights
to an Eligible Person under this Plan.
Black Box shall mean Black
Box Corporation, a Delaware corporation.
Board shall mean the board of
directors of Black Box.
Board Approval Date shall mean date of
Board approval of this Plan, which was June 23, 2008.
Code shall mean the Internal Revenue
Code of 1986, as it now exists or may be amended from time to
time, and the rules and regulations promulgated thereunder, as
they may exist or may be amended from time to time.
Committee shall mean the Compensation
Committee of the Board, or any successor thereto, or such other
committee of the Board as is appointed by the Board to
administer this Plan; provided, however, that the
Board may designate itself as the Committee to administer this
Plan (except for purposes of Awards intended to meet the
requirements of performance-based compensation under
Section 162(m) of the Code). Except as otherwise determined
by the Board, the Committee (i) shall be comprised of not
fewer than two (2) directors, (ii) shall meet any
applicable requirements under
Rule 16b-3,
including any requirement that the Committee consist of
Non-Employee Directors (as defined in
Rule 16b-3
or any successor rule), (iii) shall meet any applicable
requirements under Section 162(m), including any
requirement that the Committee consist of outside
directors (as defined in Treasury
Regulation Section 1.162-27(e)(3)(i)
or any successor regulation) and (iv) shall meet any
applicable requirements of any stock exchange or other market
quotation system on which the Common Shares are listed.
Company shall mean Black Box and
any parent, subsidiary or affiliate of Black Box.
Common Shares shall mean shares of
common stock, par value $0.001 per share, of Black Box and
stock of any other class into which such shares may thereafter
be changed.
Director Plan means the Black
Box Corporation 1992 Director Stock Option Plan, as
amended.
Dividend Equivalents shall mean an
Associated Award of cash or other Awards with a Fair Market
Value equal to the dividends which would have been paid on the
Common Shares underlying an outstanding Award had such Common
Shares been outstanding.
Employee Plan means the Black
Box Corporation 1992 Stock Option Plan, as amended.
Effective Date shall mean the date of
stockholder approval of this Plan.
Eligible Person(s) shall mean those
persons who are full or part-time employees of the Company or
other individuals who perform services for the Company,
including, without limitation, directors who are not employees
of the Company and consultants and independent contractors who
perform services for the Company and persons to whom an offer of
employment has been extended by the Company.
Exchange Act shall mean the Securities
Exchange Act of 1934, as it now exists or may be amended from
time to time, and the rules promulgated thereunder, as they may
exist or may be amended from time to time.
Fair Market Value shall mean
(i) with respect to the Common Shares, as of any date
(a) if the Companys Common Shares are listed on any
established stock exchange, system or market, the closing market
price of the Common Shares as quoted in such exchange, system or
market on such date or, if the Common Shares are not traded on
such date, on the closest preceding date on which the Common
Shares were
I-14
traded or (b) in the absence of an established market for
the Common Shares, as determined in good faith by the Committee
or (ii) with respect to property other than Common Shares,
the value of such property, as determined by the Committee, in
its sole discretion.
Full-Value Award means any Award under
this Plan pursuant to which Common Shares may be issued that is
not either a Stock Option or a Stock Appreciation Right.
Incentive Stock Option shall mean a
Stock Option that is an incentive stock option as defined in
Section 422 of the Code. Incentive Stock Options are
subject, in part, to the terms, conditions and restrictions
described in Section 6 hereof.
Nonqualified Stock Option shall mean a
Stock Option that is not an incentive stock option as defined in
Section 422 of the Code. Nonqualified Stock Options are
subject, in part, to the terms, conditions and restrictions
described in Section 6 hereof.
Other Black Box Securities shall
mean Black Box securities (which may include, but need not
be limited to, unbundled stock units or components thereof,
debentures, preferred stock, warrants, securities convertible
into Common Shares or other property) other than Common Shares.
Other Share-Based Awards has the
meaning set forth in Section 10 hereof.
Participant shall mean an Eligible
Person to whom an Award has been granted under this Plan.
Performance Grant shall mean an Award
subject, in part, to the terms, conditions and restrictions
described in Section 9 hereof, pursuant to which the
recipient may become entitled to receive cash, Common Shares or
any other form of Award issuable under this Plan, or any
combination thereof, as determined by the Committee.
Permitted Transferee means
(i) any person defined as an employee in the Instructions
to Registration Statement
Form S-8
promulgated by the Securities and Exchange Commission, as such
Form may be amended from time to time, which persons include, as
of the date of adoption of this Plan, executors, administrators
or beneficiaries of the estates of deceased Participants,
guardians or members of a committee for incompetent former
Participants, or similar persons duly authorized by law to
administer the estate or assets of former Participants and
(ii) Participants family members who acquire Awards
from the Participant other than for value, including through a
gift or a domestic relations order. For purposes of this
definition, family member includes any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother-in-law
or
sister-in-law,
including adoptive relationships, any person sharing the
Participants household (other than a tenant or employee),
a trust in which these persons have more than fifty percent
(50%) of the beneficial interest, a foundation in which these
persons (or the Participant) control the management of assets
and any other entity in which these persons (or the Participant)
own more than fifty percent (50%) of the voting interests. For
purposes of this definition, neither (i) a transfer under a
domestic relations order in settlement of marital property
rights nor (ii) a transfer to an entity in which more than
fifty percent of the voting or beneficial interests are owned by
family members (or the Participant) in exchange for an interest
in that entity is considered a transfer for
value.
Person means any individual, firm,
corporation, partnership, limited liability company, trust,
incorporated or unincorporated association, joint venture, joint
stock company, governmental body or other entity of any kind.
Plan shall mean this Black
Box Corporation 2008 Long-Term Incentive Plan.
Restricted Period has the meaning set
forth in subsection 8(b) hereof.
Restricted Stock shall mean an Award
of Common Shares that are issued subject, in part, to the terms,
conditions and restrictions described in Section 8 hereof.
I-15
Restricted Stock Units shall mean an
Award of the right to receive either (as the Committee
determines) Common Shares or cash equal to the Fair Market Value
of a Common Share, issued subject, in part, to the terms,
conditions and restrictions described in Section 8 hereof.
Rule 16b-3
shall mean
Rule 16b-3
promulgated by the Securities and Exchange Commission under the
Exchange Act and any successor rule.
Section 162(m) shall mean
§162(m) of the Code, any rules or regulations promulgated
thereunder, as they may exist or may be amended from time to
time, or any successor to such section.
Section 409A shall mean
§409A of the Code, any rules or regulations promulgated
thereunder, as they may exist or may be amended from time to
time, or any successor to such section.
Section 422 shall mean §422
of the Code, any rules or regulations promulgated thereunder, as
they may exist or may be amended from time to time, or any
successor to such section.
Separation from Service shall mean the
Participants death, retirement or other termination of
employment with Black Box (including all persons treated as
a single employer under Section 414(b) and 414(c) of the
Code) that constitutes a separation from service
(within the meaning of Section 409A). For purposes hereof,
the determination of controlled group members shall be made
pursuant to the provisions of Section 414(b) and 414(c) of
the Code; provided that the language at least
50 percent shall be used instead of at least
80 percent in each place it appears in
Section 1563(a)(1), (2) and (3) of the Code and
Treas. Reg. § 1.414(c)-2; provided, further,
where legitimate business reasons exist (within the meaning
of Treas. Reg. § 1.409A-1(h)(3)), the language
at least 20 percent shall be used instead of
at least 80 percent in each place it appears.
Specified Employee means a key
employee (as defined in Section 416(i) of the Code without
regard to paragraph (5) thereof) of Black Box as
determined in accordance with Section 409A and the
procedures established by the Company.
Stock Appreciation Right shall mean an
Award of a right to receive (without payment) cash, Common
Shares, Other Black Box Securities or property or other
forms of payment, or any combination thereof, as determined by
the Committee, based on the increase in the value of the number
of Common Shares specified in the Stock Appreciation Right.
Stock Appreciation Rights are subject, in part, to the terms,
conditions and restrictions described in Section 7 hereof.
Stock Option shall mean an Award of a
right to purchase Common Shares. The term Stock Option shall
include Nonqualified Stock Options and Incentive Stock Options.
Ten Percent Employee shall mean
an employee of Black Box or any parent or subsidiary of
Black Box who owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of Black
Box or any parent or subsidiary of Black Box within
the meaning of Code Sections 424 (e) and (f).
Treasury Regulations shall mean final,
proposed or temporary regulations of the Department of Treasury
under the Code and any successor regulation.
I-16
14475
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 R. Terry Blakemore 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
2008 Annual Meeting of Stockholders of the Company to be held on Tuesday, August 12, 2008, 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 proposal numbers 2 and 3, 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)
P
R
O
X
Y |
ANNUAL MEETING OF STOCKHOLDERS OF
BLACK BOX CORPORATION
August 12, 2008
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
Signature of Stockholder Date: Signature of Stockholder Date:
Note: 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.
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.
1. Election of six (6) members of the Board of Directors:
O William F. Andrews
O R. Terry Blakemore
O Richard L. Crouch
O Thomas W. Golonski
O Thomas G. Greig
O Edward A. Nicholson, Ph.D.
2. Approval of the 2008 Long-Term Incentive Plan.
3. 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, 2009.
The Board of Directors has established the close of business on Monday,
June 16, 2008 as the record date for the determination of the stockholders
entitled to notice of and to vote at the Annual Meeting.
FOR AGAINST ABSTAIN
FOR ALL NOMINEES
WITHHOLD AUTHORITY
FOR ALL NOMINEES
FOR ALL EXCEPT
(See instructions below)
INSTRUCTIONS: 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:
NOMINEES:
The Board of Directors recommends a vote FOR each of the nominees listed and FOR proposal
numbers 2 and 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR
BLACK INK AS SHOWN HERE x
Please detach along perforated line and mail in the envelope provided.
20633000000000000000 3 081208 |
Signature of Stockholder Date: Signature of Stockholder Date:
Note: 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.
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.
1. Election of six (6) members of the Board of Directors:
O William F. Andrews
O R. Terry Blakemore
O Richard L. Crouch
O Thomas W. Golonski
O Thomas G. Greig
O Edward A. Nicholson, Ph.D.
2. Approval of the 2008 Long-Term Incentive Plan.
3. 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, 2009.
The Board of Directors has established the close of business on Monday,
June 16, 2008 as the record date for the determination of the stockholders
entitled to notice of and to vote at the Annual Meeting.
FOR AGAINST ABSTAIN
FOR ALL NOMINEES
WITHHOLD AUTHORITY
FOR ALL NOMINEES
FOR ALL EXCEPT
(See instructions below)
INSTRUCTIONS: 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:
JOHN SMITH
1234 MAIN STREET
APT. 203
NEW YORK, NY 10038
NOMINEES:
ANNUAL MEETING OF STOCKHOLDERS OF
BLACK BOX CORPORATION
August 12, 2008
MAIL Sign, date and mail your proxy card in the
envelope provided as soon as possible.
TELEPHONE Call toll-free 1-800-PROXIES
(1-800-776-9437) in the United States or 1-718-
921-8500 from foreign countries and follow the
instructions. Have your proxy card available when
you call.
INTERNET Access www.voteproxy.com and
follow the on-screen instructions. Have your proxy
card available when you access the web page.
IN PERSON You may vote your shares in person
by attending the Annual Meeting.
PROXY VOTING INSTRUCTIONS
Please detach along perforated line and mail in the envelope provided IF you are not voting via
telephone or the Internet.
The Board of Directors recommends a vote FOR each of the nominees listed and FOR proposal
numbers 2 and 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR
BLACK INK AS SHOWN HERE x
- OR -
- OR -
20633000000000000000 3 081208
COMPANY NUMBER
ACCOUNT NUMBER |
You may enter your voting instructions at 1-800-PROXIES in the United States or 1-718-921-8500 from
foreign countries or www.voteproxy.com up until 10:00 AM Eastern Daylight Time the day of the
meeting.
- OR - |