Item
10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
Directors
The Board is composed of
nine directors. Certain information regarding the members of the Board as of
July 20, 2016, is set forth below, including with respect to each director of
the Company, the name and age of the director as of July 20, 2016, present
position with the Company or principal occupation, and employment history during
the past five years. There are no family relationships between any directors or
executive officers of the Company.
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Name of Director
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Age
|
|
Director
Since
|
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Position
|
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Robert J. Andersen
(1)
|
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52
|
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2015
|
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Director
|
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Paul
R. Auvil III
(1)(3)
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52
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2007
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Director
|
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Louis DiNardo
(2)
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56
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2013
|
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Director
|
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Dale
L. Fuller
(3)
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57
|
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2014
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Director
|
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Jon W. Gacek
|
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54
|
|
2011
|
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Director, President and Chief Executive
Officer
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David A. Krall
(2)
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56
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2011
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Director
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Gregg J. Powers
(3)
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53
|
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2013
|
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Director
|
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Clifford Press
(3)
|
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62
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2016
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Director
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David E. Roberson
(1)(2)
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61
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2011
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Director
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|
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(1)
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Member of the Audit
Committee.
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(2)
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Member of the
Leadership and Compensation Committee.
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(3)
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Member of the
Corporate Governance and Nominating Committee.
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Mr. Robert J.
Andersen
has served as Executive
Vice President and Chief Financial Officer of Tessera Technologies, Inc., a
leading developer of semiconductor packaging solutions and advanced imaging
products, since January 2014. From June 2011 to July 2013, he served as the
Executive Vice President and Chief Financial Officer of G2 Holdings Corp. d/b/a
Components Direct, a privately held provider of cloud-based product life cycle
solutions that was acquired by Avnet, Inc. in April 2013. From September 2008 to
June 2011, Mr. Andersen served as Vice President of Finance and then as Chief
Financial Officer at Phoenix Technologies Ltd., a publicly traded developer of
core system software and productivity solutions for personal computers. Prior to
his time at Phoenix Technologies, Mr. Andersen served in various senior
financial roles at Wind River Systems, Inc., a publicly traded embedded systems
software company, and NextOffice, Inc., a privately held technology company. Mr.
Andersen began his finance career at Hewlett-Packard Company, where he served in
various controller, treasury and technology finance management roles. Mr.
Andersen has a B.A. in Economics from the University of California, Davis, and
an M.B.A. from the Anderson School of Management at the University of
California, Los Angeles. We believe that Mr. Andersen possesses specific
attributes that qualify him to serve as a member of the Board, including his
significant expertise in financial operations, capital allocation decisions and
M&A transactions.
Mr. Paul R. Auvil
III
has served as Chief Financial
Officer of Proofpoint, Inc. since March 2007, leading the company’s public
offering in April of 2012. Prior to joining Proofpoint, Mr. Auvil was an
entrepreneur-in-residence with Benchmark Capital, a venture capital firm, from
October 2006 to March 2007. While at Benchmark, he evaluated a broad range of
investments and advised various portfolio companies throughout the technology
industry. From August 2002 to July 2006, he held the position of Chief Financial
Officer of VMware, Inc., a global leader in virtualization and cloud
infrastructure companies. Prior to that, Mr. Auvil served for four years as
Chief Financial Officer at Vitria Technology, where he led various aspects of
the company’s financial and business operations, executing both an initial and
secondary public offering during his tenure. Earlier in his career, he spent 10
years at VLSI Technology, ultimately becoming vice president and general manager
of its Internet and Secure Products Division. Mr. Auvil holds a Bachelor of
Engineering degree from Dartmouth College and a Master of Management degree from
the J.L. Kellogg Graduate School of Management at Northwestern University. He
also serves on the Board of Directors of Marin Software, a provider of a Revenue
Acquisition Management platform for advertisers and agencies. Mr. Auvil is the
Chairman of Quantum’s Board and is a member of the Company’s Corporate
Governance and Nominating Committee as well as the Audit Committee. With a
career in finance and technology spanning more than 25 years, Mr. Auvil brings
valuable management, financial and corporate leadership experience to Quantum.
In particular, he brings to the Board a deep understanding of financial
statements, corporate finance, accounting and capital markets; senior management
experience at technology companies relevant to Quantum’s business; and expertise
on issues facing public companies and governance matters. As a trained engineer,
Mr. Auvil also holds patents related to digital video compression in Japan and
high-speed, PCI compatible on-chip data bus in the U.S., which demonstrates his
extensive technological expertise and provides valuable insight to our Board on
the critical role of innovation and strategic growth direction.
1
Table of Contents
Mr. Louis
DiNardo
has served as a Principal
of BackBeat Management Solutions, a venture capital company, since May 2016. He
served as the President and Chief Executive Officer of Exar Corporation, a
provider of integrated circuits and solutions for data communication,
networking, storage, consumer and industrial applications, from January 2012 to
October 2015. From January 2008 through December 2011, he was a Partner at
Crosslink Capital, a stage-independent venture capital and growth equity firm
based in San Francisco and focused on semiconductor and alternative energy
technology investment in private companies. Mr. DiNardo was a partner at
VantagePoint Venture Partners from January 2007 through January 2008. Mr.
DiNardo was President and Chief Operating Officer at Intersil Corporation from
January 2006 through October 2006. Prior to his promotion, Mr. DiNardo held the
position of Executive Vice President of the Power Management Business at
Intersil. He held the position of President and Chief Executive Officer, as well
as Co-Chairman of the Board of Directors at Xicor Corporation, a public company,
from 2000 until Intersil acquired the company in July of 2004. Mr. DiNardo spent
thirteen years at Linear Technology where he was Vice President of Worldwide
Marketing and General Manager of the Mixed-Signal Business Unit. He began his
career in the semiconductor industry at Analog Devices Incorporated where he
served for eight years in a variety of technical and management roles. Mr.
DiNardo currently serves on the Boards of Fixeus, Incorporated and of San Diego
State University, Lavin Entrepreneur Center and served on the Board of Directors
of Exar Corporation from 2012 to 2015. Mr. DiNardo is a member of Quantum’s
Leadership and Compensation Committee. We believe that Mr. DiNardo possesses
specific attributes that qualify him to serve as a member of the Board,
including his executive and board experience.
Mr. Dale L.
Fuller
has served as Chairman of
the Supervisory Board of AVG Technologies N.V. (“AVG”), a global leader in
mobile security, PC optimization, Internet security, and privacy software, since
November 2009. He joined AVG’s Board of Directors in October 2008. Mr. Fuller
also has served as Chairman of the Board of Directors of MobiSocial, Inc., a
Stanford-based technology startup, since January 2013. Previously, Mr. Fuller
served as President and Chief Executive Officer of MokaFive (n/k/a moka5, Inc.),
a venture-backed private company, from 2008 to January 2013. Mr. Fuller also
previously served on the Board of Directors of Zoran Corporation, a
multinational digital technology company, from March 2011 until its merger with
CSR plc in August 2011, and as Chairman of the Board of Directors of Webgistix
Corporation, a global leader in e-commerce fulfillment, from October 2008
through January 2013. Prior to that, Mr. Fuller served as a director of Phoenix
Technologies, Ltd., a BIOS software company, from November 2009 until its sale
to Marlin Equity Partners in November 2010. Mr. Fuller also previously served on
the Boards of Directors of Guidance Software, Inc., Krugle, Inc., Quest Aircraft
Company, LLC and McAfee, Inc. (“McAfee”). In addition, Mr. Fuller served as
interim President and CEO of McAfee, from October 2006 through March 2007. Prior
to joining McAfee, he was President and CEO of Borland Software Corporation,
from 1999 until 2005. Mr. Fuller also founded and served as President and CEO of
WhoWhere? Corporation, which was later acquired by Lycos, Inc. As a start-up
company CEO, Mr. Fuller led the expansion of several domain sites, including
angelfire.com and Mailcity. In addition, he has held various senior executive
positions at Apple Computer, NEC, Motorola, and Texas Instruments. Mr. Fuller
holds an honorary doctorate from St. Petersburg State University. We believe
that Mr. Fuller’s experience in the technology industry both as an executive
officer and a director of private and publicly traded technology companies well
qualifies him to serve on the Company’s Board.
Mr. Jon W.
Gacek
has served as President and
Chief Executive Officer of Quantum Corporation since April 2011 and was also
appointed to the Company’s Board of Directors in April 2011. He was President
and Chief Operating Officer of Quantum from January 2011 through March 2011,
with responsibility for operations, sales, marketing and service. Mr. Gacek
joined the Company as Executive Vice President and Chief Financial Officer in
August 2006 following Quantum’s acquisition of Advanced Digital Information
Corporation (“ADIC”), and he was promoted to Executive Vice President, Chief
Financial Officer and Chief Operating Officer in June 2009. Prior to joining
Quantum, Mr. Gacek served as the Chief Financial Officer at ADIC, a manufacturer
of tape libraries and storage management software, from 1999 to 2006. He also
led ADIC’s Operations division during his last three years at the company.
Before ADIC, Mr. Gacek was an audit partner at PricewaterhouseCoopers LLP,
leading the Technology Practice in the firm’s Seattle office. While there, he
assisted several private equity investment firms with numerous mergers,
acquisitions and leveraged buyouts situations, among other transactions. Mr.
Gacek served on the boards of Power-One from 2008 through 2013, of Market Leader
from 2006 to 2013 and of LWD Technology from 2003 through 2007. Mr. Gacek holds
a Bachelor of Arts degree in Accounting from Western Washington University. With
nearly 30 years of business, operating and leadership experience, he brings to
the Quantum Board extensive knowledge of the data storage and data protection
industry and the Company’s worldwide business in particular.
Mr. David A.
Krall
has served as a strategic
advisor to Roku, Inc., a leading manufacturer of media players for streaming
entertainment, since December 2010 and to Universal Audio, Inc., a manufacturer
of audio hardware and software plug-ins, since August 2011. From February 2010
to November 2010, he served as President and Chief Operating Officer of Roku,
where his was responsible for managing all functional areas of the company.
Prior to that, Mr. Krall spent two years as President and Chief Executive
Officer of Qsecure, Inc., a developer of secure credit cards based on
micro-electro-mechanical-system technology. From 1995 to July 2007, he held a
variety of positions of increasing responsibility and scope at Avid Technology,
Inc., a leading provider of digital media creation tools for the media and
entertainment industry. His tenure at Avid included serving seven years as the
company’s President and Chief Executive Officer. Earlier in his career, Mr.
Krall worked in engineering and project management at several companies. He
holds Bachelor and Master degrees in Electrical Engineering from the
Massachusetts Institute of Technology and a Master of Business Administration
degree, with distinction, from Harvard Business School. Mr. Krall also currently
serves on the Board of Directors for Universal Audio, Audinate Pty Ltd., and
Progress Software Corp. He is the Chair of Quantum’s Leadership and Compensation
Committee. Mr. Krall brings to the Quantum Board a broad set of business skills,
a strong educational background in engineering and 30 years of diverse
professional experience. This includes significant achievements in a wide
variety of disciplines and he has demonstrated leadership in a variety of
management roles. In addition, throughout his career Mr. Krall has had a strong
focus on market-driven product development, corporate strategy and global
operating expertise. Further, his experience as a member of many public and
private company Boards provides him with an enhanced perspective on an array of
governance issues.
2
Table of Contents
Mr. Gregg J.
Powers
serves as Chairman and
Chief Executive Officer of Private Capital Management LLC (along with its
successor entities “PCM”), a provider of equity portfolio management. After
joining PCM in 1988, he became co-portfolio manager during the mid-1990s,
focusing on the firm’s primary underwriting of investments in technology,
healthcare and telecommunications. He was named President of PCM in 1999, Chief
Executive Officer in 2008 and Chairman in 2009. As portfolio manager, Mr. Powers
oversees all aspects of the investment of PCM client portfolios. He also
currently serves as Chairman of the Board of Directors of Alere, Inc., a global
leader in near-patient diagnosis, monitoring and health information technology.
Mr. Powers has a Bachelor of Science degree in Finance from the University of
Florida. He is the Chair of Quantum’s Corporate Governance and Nominating
Committee. Mr. Powers offers critical investor insights and shareholder
representation to the Quantum Board, helping to guide the Company’s strategic
direction and overall operational and financial performance. He also brings deep
financial expertise, providing an understanding of corporate finance, accounting
and capital markets.
Mr. Clifford
Press
has served as Managing
Member of Oliver Press Partners, LLC, an investment advisory firm, since March
2005. From 1986 to March 2003, Mr. Press served as a General Partner of Hyde
Park Holdings, Inc., a private equity investment firm. Mr. Press currently
serves as a director and a member of the Nominating and Corporate Governance
Committee of Newcastle Investment Corp (NYSE: NCT) a real estate investment
trust. From March 2008 to November 2009, Mr. Press served as a director and
member of the Governance & Nominating Committee of Coherent Inc., a
manufacturer of laser based photonic products. From December 2011 to February
2013, Mr. Press served as a director and member of the Compensation Committee of
SeaBright Holdings, Inc., a specialty provider of multi-jurisdictional workers’
compensation insurance. From 2001 to June 2011, Mr. Press served as a director
of GM Network Ltd., a private holding company providing Internet-based digital
currency services. Mr. Press received his MA degree from Oxford University and
an MBA degree from Harvard Business School. Mr. Press is a member of the
Company’s Corporate Governance and Nominating Committee. We believe that Mr.
Press’s financial expertise and over 25 years of experience investing in a broad
range of public and private companies together with his public company board
experience would make him well qualified to serve on the Board.
Mr. David E.
Roberson
has served as a business
consultant to technology companies since 2012. Mr. Roberson served as Senior
Vice President within the Enterprise Servers, Storage and Networking Group of HP
from May 2007 to May 2011, where he was responsible for building on the
company’s foundation as a leading provider of storage solutions and pursuing new
opportunities for global growth. Additionally, he was General Manager of HP’s
StorageWorks Division from May 2007 to October 2010. Prior to that, Mr. Roberson
spent 26 years at Hitachi Data Systems, starting as corporate counsel and
eventually becoming President and Chief Executive Officer, a position he held
from 2006 to May 2007. He also served as President and Chief Operating Officer
from 2002 to 2006 and Chief Operating Officer from 2000 to 2002. Mr. Roberson
began his technology career at Amdahl Corporation in 1980 following posts as
adjunct professor at Golden Gate University School of Law and research director
at UC Hastings College of the Law. He also serves on the Board of Brocade
Communications Systems, Inc., a networking solutions company. In addition, Mr.
Roberson has significant previous experience serving as a board member of public
companies in the software and technology industries, including International
Game Technology Corporation, where he served on the board from 2008 to 2013,
Spansion Corporation (2005-2008), and Integrated Device Technology Corporation
(2004-2005). Mr. Roberson holds a Bachelor of Social Ecology degree from the
University of California at Irvine, and a law degree from Golden Gate University
School of Law in San Francisco. He also studied financial management at Harvard
Business School. He is the Chair of the Quantum’s Audit Committee and a member
of the Company’s Leadership and Compensation Committee. Mr. Roberson brings to
the Quantum Board vast storage industry knowledge that lends keen insight into
the nature of the Company’s business, enabling him to provide meaningful
guidance on strategic direction, technology innovation and growth opportunities.
Selection Arrangements
Each of Messrs. Andersen,
DiNardo, Fuller and Press (the “Starboard Nominees”) was initially nominated for
election to the Board, or has been appointed to the Board, pursuant to a
settlement agreement (the “Settlement Agreement”) between the Company and
Starboard Value LP and certain of its affiliates (“Starboard”) dated July 28,
2014, as described in our Current Report on Form 8-K filed with the SEC on July
29, 2014. Mr. DiNardo was initially recommended to the Corporate Governance and
Nominating Committee for nomination to the Board at the 2013 Annual Meeting and
Mr. Fuller at the 2014 Annual Meeting pursuant to a settlement agreement between
the Company and Starboard Value LP and certain of its affiliates dated May 13,
2013 (the “2013 Settlement Agreement”), as described in our Current Report on
Form 8-K filed with the SEC on May 14, 2013. In April 2016, Mr. Press replaced
Philip Black who was initially recommended for election pursuant to the 2013
Settlement Agreement and had been a director since May 2013.
Executive Officers
Pursuant to Instruction
G.3. to Form 10-K, information regarding the names, biographical information and
business experience of our executive officers required by Item 401 of Regulation
S-K was provided in Part I of the Original Filing under the caption “Executive
Officers and Management Team.”
Audit
Committee
The Company has a
separately-designated standing Audit Committee which currently consists of Mr.
Roberson, Chair of the committee, Mr. Andersen and Mr. Auvil, all of whom are
independent directors, including all applicable enhanced independence
requirements for audit committee members under NYSE listing standards and SEC
rules, and are financially literate, as defined in the applicable NYSE listing
standards and SEC rules and regulations. Our Board has determined that David E.
Roberson is an audit committee financial expert as defined by SEC rules. The
Audit Committee, which generally meets at least twice per quarter, once prior to
quarterly earnings releases and again prior to the filing of the Company’s
quarterly and annual reports with the SEC, appoints the Company’s independent
registered public accounting firm and is responsible for approving the services
performed by the Company’s independent registered public accounting firm and for
reviewing and evaluating the Company’s accounting principles and its systems of
internal accounting controls. At each meeting, the Audit Committee first meets
with Company management and the Company’s independent registered public
accounting firm in order to review financial results and conduct other
appropriate business. In addition, the Audit Committee regularly meets
separately with the Company’s independent registered public accounting firm
without the presence of management, as well as with the Company’s management and
with the Company’s Internal Audit department. The Audit Committee held a total
of ten (10) meetings during the fiscal year ended March 31, 2016 (“Fiscal
2016”).
3
Table of Contents
Stockholder Nominations
There have been no changes
to the procedures by which directors may recommend nominees for our board of
directors since we have last disclosed such procedures.
Code of Ethics
We have adopted a code of
ethics that applies to our principal executive officer and all members of our
finance department, including the principal financial officer and principal
accounting officer. This code of ethics is posted on our website. The Internet
address for our website is: http://www.quantum.com, and the code of ethics may
be found by clicking “About Us” from the home page and then choosing “Investor
Relations” and then “Corporate Governance.” Copies of the code are available
free upon request by a stockholder.
We intend to satisfy the
disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or
waiver from, a provision of this code of ethics by posting such information on
our website, at the address and location specified above.
We have adopted Corporate
Governance Principles, which are available on our website at
http://www.quantum.com, where they may be found by clicking “About Us” from the
home page and then choosing “Investor Relations” and then “Governance
Documents.” Copies of our Corporate Governance Principles are available free
upon request by a stockholder. The charters of our Audit Committee, Leadership
and Compensation Committee and Corporate Governance and Nominating Committee are
also available on our website at http://www.quantum.com, where they may be found
by clicking “About Us” from the home page and then choosing “Investor Relations”
and then “Governance Documents.” Copies of these committee charters are
available free upon request by a stockholder.
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the
Exchange Act requires the Company’s Section 16 officers, directors and persons
who own more than ten percent (10%) of a registered class of the Company’s
equity securities to file reports of ownership and changes in ownership with the
SEC. Such executive officers, directors and greater than ten-percent
stockholders are also required by SEC rules to furnish the Company with copies
of all forms that they file pursuant to Section 16(a). Based solely on its
review of the copies of such reports received by the Company and on written
representations from certain reporting persons, the Company believes that all
required filings were timely made during Fiscal 2016, except for one filing for
Mr. Stedman reporting the surrendering of shares to satisfy tax withholding
obligations upon the vesting of restricted stock units, which was late due to an
administrative error.
Item
11.
EXECUTIVE COMPENSATION
Compensation Discussion
and Analysis
This Compensation
Discussion and Analysis (“CD&A”) describes the overall philosophy, material
elements and actual compensation provided to the executive officers of the
Company who served as our principal executive officer and principal financial
officer during Fiscal 2016, as well as the three executive officers who were the
next most highly-compensated executive officers as of the end of Fiscal 2016.
Our named executive officers for Fiscal 2016 are:
|
●
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Jon W. Gacek,
President and Chief Executive Officer (our
“CEO”);
|
|
●
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Christopher S.
Willis, Interim Senior Vice President and Chief Financial Officer (our
“CFO”);
|
|
●
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William C. Britts,
Senior Vice President, Worldwide Sales and
Marketing;
|
|
●
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Robert S. Clark,
Senior Vice President, Product Operations;
|
|
●
|
Geoffrey G. Stedman,
Senior Vice President, StorNext Solutions; and
|
|
●
|
Linda M. Breard,
Former Senior Vice President and Chief Financial Officer (our former
“CFO”).
|
Effective January 26, 2016,
Ms. Breard voluntarily resigned as Senior Vice President and Chief Financial
Officer to pursue another opportunity outside of our company. Mr. Willis, Vice
President, Financial Planning and Analysis, served as Interim Senior Vice
President and Chief Financial Officer for the rest of Fiscal 2016. Effective
April 15, 2016, Mr. Fuad Ahmad joined the Company as Senior Vice President and
Chief Financial Officer. Mr. Stedman was a newly named executive in Fiscal 2016.
Executive Summary –
Overview of Fiscal 2016
We are a leading expert in
scale-out storage, archive and data protection, providing solutions for
capturing, sharing, managing and preserving digital assets over the entire data
lifecycle. Our customers, ranging from small businesses to large/multi-national
enterprises, trust us to address their most demanding data workflow challenges.
Our end-to-end tiered storage solutions enable users to maximize the value of
their data by making it accessible whenever and wherever needed, retaining it
indefinitely and reducing total cost and complexity. We work closely with a
broad network of distributors, value-added resellers (“VARs”), direct marketing
resellers (“DMRs”), original equipment manufacturers (“OEMs”) and other
suppliers to meet customers’ evolving needs.
4
Table of Contents
Business and
Financial Highlights for Fiscal 2016
Our goal for Fiscal 2016 is
to increase stockholder value by growing our scale-out storage revenue and
investing to drive future scale-out growth while also delivering on our
operating profit goals. We continued to focus on building our momentum in three
main broad categories of scale-out storage: media and entertainment,
intelligence and surveillance and technical applications. Outside of scale-out
storage, our strategy continued to include leveraging our technology leadership,
our extensive customer base and our channel and technology partnerships to
generate profits and cash from our offerings.
During Fiscal 2016, our
data protection revenues were impacted by overall weakness in general storage
market. We took a series of actions to reduce our cost structure without
impacting our scale-out revenue growth. During the third quarter of Fiscal 2016,
we added Xcellis™ workflow storage in our scale-out storage portfolio, which is
a high performance storage solution engineered to optimize demanding workflows
and accelerate time to insight. We also expanded Q-Cloud® offerings with the
launch of Q-Cloud Vault, a new service that enables users to take advantage of
secure, low-cost public cloud storage for long-term retention of digital assets.
We began offering LTO-7 to our tiered storage portfolio, more than doubling the
capacity over previous generations and enabling low-cost, energy-efficient and
secure storage for protecting and retaining data.
Some of our financial
highlights in Fiscal 2016 included:
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●
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We had total revenue
of $476.0 million in Fiscal 2016, a $77.1 million decrease from Fiscal
2015, primarily due to decreased revenue from data protection tape
automation systems, disk backup systems, media and service, partially
offset by an increase in revenue from scale-out storage
solutions.
|
|
●
|
Revenue from branded
scale-out storage solutions generally increased in Fiscal 2016 compared to
Fiscal 2015 in North America.
|
|
●
|
Our gross margin
percentage decreased 120 basis points from Fiscal 2015 to 43.0% primarily
due to a combination of lower revenue and a decrease in material margin
related to changes in our overall revenue mix. Higher margin service
revenue decreased and lower margin products comprised a higher portion of
our product revenue. In addition, we are experiencing overall pricing
pressure in the storage market, which has resulted in increased
discounting.
|
|
●
|
Our operating
expenses increased $40.1 million, or 17.4%, from Fiscal 2015 as a result
of a $55.6 million goodwill impairment charge. The increase in operating
expense was offset by a decrease in compensation and benefits largely
attributable to recognition of a profit sharing bonus in Fiscal 2015 which
was not repeated in Fiscal 2016, a decrease in commission expense on lower
branded revenue and a decrease in intangible amortization expense due to
certain intangibles becoming fully amortized during Fiscal
2015.
|
|
●
|
We had a $74.7
million net loss in Fiscal 2016 compared to a $16.8 million net income in
Fiscal 2015, which included a gain of $13.6 million resulting from the
sale of our investment in a privately held company in Fiscal
2015.
|
|
●
|
We repaid $83.7
million remaining balance of our 3.50% convertible subordinated notes due
November 15, 2015 for $85.2 million, which included $1.1 million of
accrued interest. We used a combination of $68.9 million of proceeds from
our credit agreement with Wells Fargo and $16.3 million of cash to fund
the purchases and pay the accrued interest. In connection with the
purchases, we recorded a loss on debt extinguishment of $0.4 million
comprised of a loss of $0.3 million from the notes purchased and $0.1
million of unamortized debt issuance costs related to the purchased notes.
|
Executive
Compensation Highlights for Fiscal 2016
We are committed to
responsible and effective executive compensation practices that aim to enhance
stockholder value. We seek to balance the need to compensate our executive
officers fairly and competitively based on their importance to the growth and
success of our business and their individual contributions with our objective of
ensuring that their compensation reflects Company performance that rewards for
both short-term and long-term financial success. Our executive compensation
program aims to (i) enhance stockholder value by designing appropriate
leadership and compensation programs to enable the successful execution of the
Company’s corporate strategy and objectives, (ii) facilitate competitiveness by
attracting and retaining the best talent and (iii) promote meritocracy by
recognizing individual contributions. During Fiscal 2016 we took the following
actions with respect to the compensation of our named executive officers:
|
●
|
We reviewed the
salary of our executive officers in comparison to the market and the
performance of each executive. As a result of this review, we determined
not to increase Mr. Gacek’s or Mr. Britt’s salaries, but provided
increases to both Ms. Breard and Mr. Clark of 3%-8% to reflect their
individual contributions for the prior fiscal year as well as to better
align their base salaries with the market for comparable executive
positions.
|
|
●
|
Ms. Breard, our
Senior Vice President and Chief Financial Officer voluntarily resigned to
pursue an opportunity outside the Company. Mr. Willis served as the
Interim Senior Vice President and Chief Financial Officer for the
remainder of Fiscal 2016. Effective April 15, 2016, Mr. Fuad Ahmad joined
the Company as Senior Vice President and Chief Financial
Officer.
|
|
●
|
The Company did not
achieve the operating income performance targets that had been established
for purposes of funding our annual bonus program, therefore the bonus pool
was not funded and no bonuses were allocated in Fiscal
2016.
|
|
●
|
Since Fiscal 2014 and
including in Fiscal 2016, the Company moved away from granting only
time-based restricted stock units toward a mix of time-based restricted
stock units and performance-based restricted stock units for the CEO. The
performance-based equity plan was designed to only award shares if the
Company met the corporate operating income and exceeded the specified
revenue targets, otherwise no shares would be earned if Company’s
performance falls short of the defined performance measure. Based on
actual Fiscal 2016 results, the performance was not met and Mr. Gacek did
not earn any portion of his Fiscal 2016 performance-based
awards.
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5
Table of Contents
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●
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Since Fiscal 2015 and including in Fiscal
2016, the Company moved away from granting only time-based restricted
stock units toward a mix of time-based restricted stock units and
performance-based restricted stock units for our remaining executive
officers.
40% of the total
awards granted to the remaining executive officers were performance-based.
Based on actual Fiscal 2016 results, executive officers did not earn any
of their performance-based equity awards.
|
|
●
|
In Fiscal 2016, the Company moved from a
three-year vesting schedule to four-year vesting schedule for the
time-based restricted stock units. The performance stock units remained on
the three-year vesting schedule.
|
|
●
|
We continue to maintain responsible
compensation practices including having stock ownership guidelines for our
CEO, an anti-pledging/anti-hedging policy, no tax gross-ups and no
excessive executive perquisites.
|
Executive Compensation
Philosophy
Pay for Performance
Compensation Philosophy and Objectives
The Executive compensation
program is intended to encourage and reward the executives for significant
contributions to the Company’s success and for the creation of stockholder
value. To that end, the Company has established and maintains a strong
pay-for-performance Executive compensation program. The Committee believes that
our executive compensation program should:
|
●
|
provide a strong link between pay and
performance on both an individual and Company level and encourage and
reward executives for significant contributions to the Company’s success;
|
|
●
|
ensure that the interests of all executives
are aligned with the success of the Company and the interests of the
Company’s stockholders;
|
|
●
|
promote the achievement of the Company’s
short-term and long-term strategic objectives;
|
|
●
|
provide compensation opportunities that will
attract, motivate and retain the most qualified executive talent to
accomplish these objectives;
|
|
●
|
provide executives with
a total compensation package that strikes an appropriate balance between
fixed and variable pay and between short-term and long-term incentives;
|
|
●
|
take into account relevant economic and
market considerations; and
|
|
●
|
ensure that the total compensation levels of
executives are externally competitive and internally consistent and fair.
|
Our executive compensation
program is designed to offer target cash and equity compensation opportunities
at market-competitive levels and to reward superior Company and individual
performance with above-market compensation. Company performance, as measured by
pre-established corporate performance metrics and share price, together with
individual performance, as measured through the Company’s annual performance
evaluation process, greatly affect annual and long-term compensation levels.
Actual annual executive compensation is expected to be, and will be, below
targeted market median levels if the Company and/or the executive officer do not
achieve the designated Company and individual performance objectives, as has
been the case in recent years, including Fiscal 2016. The Committee believes
that this program aligns the interests of our executive officers with those of
our stockholders in promoting the creation of long-term stockholder value.
Competitive
Positioning
Market competitiveness is
an important element of our executive compensation program. The Committee has
established that market competitiveness for this purpose generally means the
market median and has determined to generally target the market median with
respect to each component of our executive compensation program. In assessing
the market competitiveness of our executive compensation program, the individual
elements, as well as the aggregate total compensation of each executive officer
(which includes base salary, target annual bonus opportunity and annual equity
awards), are compared to the corresponding market median for executive officers
holding similar positions or who have similar levels of responsibility in
technology companies of similar size. Nevertheless, although our compensation
philosophy is to generally target the market median for competitiveness
purposes, the actual compensation paid to our executive officers may be above or
below the competitive market based on individual and Company performance.
As its sources of data for
identifying and establishing market median compensation levels, the Committee
utilizes applicable compensation data from the Company’s Peer Group (as defined
and discussed below), as well as from the Radford Global Technology and Radford
Global Sales surveys (the “Radford Surveys”) of technology companies with annual
revenue between $500M and $999.9M (collectively, the “Market Data”). In the case
of our CEO, the Committee utilizes the data from our Peer Group for competitive
benchmarking purposes as the Committee believes this data, given the composition
of the Peer Group and the fact that each public company is required to disclose
the compensation of its CEO, is the best source of competitive CEO compensation.
In the case of our other executive officers, for Fiscal 2016, the Committee
referenced Peer Group data provided by our independent compensation consultant.
The positions of our executive officers for Fiscal 2016 were found to be
directly comparable to those found in our Peer Group specific to technology
companies that are comparable in size to the Company in terms of revenue.
Peer Group
The Committee has
established a Peer Group of companies that are reasonably comparable to the
Company in terms of industry and financial characteristics so as to provide
relevant compensation information to support compensation decision making. The
Committee reviews the Peer Group on an annual basis. For purposes of Fiscal
2016, the Committee established the following criteria for purposes of
conducting its annual review and update of the Peer Group:
|
●
|
Technology hardware and equipment companies;
|
|
●
|
Inclusion of some companies with a
hardware/software mix or systems/software orientation based on the
Company’s strategic business
direction;
|
|
●
|
Comparability to the
Company in terms of revenue (~0.5x – 2.0x) and market capitalization
(~0.5x – 5.0x); and
|
|
●
|
Other factors, including, geography, revenue
growth, profitability, valuation, number of employees, and enterprise
value.
|
6
Table of Contents
In November 2014, the
Committee, with the assistance of the Company’s independent compensation
consultant, Compensia, Inc. (“Compensia”), reviewed and updated its compensation
Peer Group. Based on the above criteria, Compensia recommended, and the
Committee approved, the following group of peer companies for Fiscal 2016 (the
“Peer Group”) (with annual revenue and market capitalization shown based on the
latest available public filings with the SEC at the time the Peer Group was
established):
|
Company
|
|
Annual
Revenue
($MM)
|
|
Market
Capitalization
($MM)
|
|
Black Box Corporation
|
|
$
|
970
|
|
$
|
365
|
|
Calix, Inc.
|
|
$
|
381
|
|
$
|
533
|
|
Checkpoint Systems, Inc.
|
|
$
|
688
|
|
$
|
571
|
|
Cray Inc.
|
|
$
|
502
|
|
$
|
1,178
|
|
Datalink Corporation
|
|
$
|
612
|
|
$
|
280
|
|
Electronics for Imaging
|
|
$
|
758
|
|
$
|
2,093
|
|
Emulex
|
|
$
|
447
|
|
$
|
457
|
|
Extreme Networks
|
|
$
|
525
|
|
$
|
508
|
|
Harmonic Inc.
|
|
$
|
461
|
|
$
|
605
|
|
Imation Corp.
|
|
$
|
782
|
|
$
|
142
|
|
Integrated Device Technology,
Inc.
|
|
$
|
493
|
|
$
|
2,429
|
|
Polycom
|
|
$
|
1,345
|
|
$
|
1,823
|
|
Qlogic Corporation
|
|
$
|
467
|
|
$
|
796
|
|
Riverbed Technology
|
|
$
|
1,074
|
|
$
|
3,007
|
|
ShoreTel, Inc.
|
|
$
|
340
|
|
$
|
419
|
|
Silicon Graphics International
Corp.
|
|
$
|
530
|
|
$
|
336
|
|
SuperMicro Computer
|
|
$
|
1,467
|
|
$
|
1,202
|
|
|
|
Median
|
|
$
|
530
|
|
$
|
571
|
|
Quantum (November 2014)
|
|
$
|
533
|
|
$
|
314
|
For Fiscal 2016, Fusion-io
was removed due to acquisition and was replaced by Cray Inc. whose revenue and
market capitalization fell within our established parameters. The Committee
concluded that the above Peer Group of 17 companies was sufficient and
representative in terms of number and size of companies for competitive
executive compensation purposes.
In October 2015, the
Committee approved additional changes for fiscal year 2017. Two peers (Emulex
and Riverbed Technology) have been removed because both companies were acquired
in 2015 and two additional peers (Polycom and Super Micro Computer) were removed
because their revenue size exceeded that of our established Peer Group
parameters. To ensure a large enough number of companies in the Peer Group, the
Committee approved five additional peers (Avid Technology, Barracuda Networks,
Infinera, Nimble Storage, and Sonus Networks) bringing the Peer Group total for
Fiscal 2017 to 18 companies. Avid Technology was formerly in the Peer Group
before being removed for Fiscal 2015 due to the potential of delisting.
Executive Compensation
Process and Decision-Making
Role of the Leadership
and Compensation Committee and the Board of Directors
– The Committee oversees and approves all
compensation and benefit arrangements for our executive officers, other than for
our CEO. In the case of the compensation of our CEO, the independent members of
the Board of Directors, based on the recommendations of the Committee, review
and approve his compensation. A substantial portion of the Committee’s work
involves an annual review of our executive compensation program, including
determining total compensation levels for our executive officers and evaluating
Company and individual executive officer performance. The Committee considers a
variety of factors when determining our executive compensation program and total
compensation levels. These factors include the Company’s financial performance
for the most recent fiscal year, the recommendations of our CEO for all
executive officers, other than for himself, the input of Compensia, and the
results of competitive studies and analyses prepared by Compensia and Company
management, the outcome of our annual say-on-pay vote, input we receive from
stockholders as well as the individual performance of each executive.
Role of Compensation
Consultant
– During Fiscal 2016,
the Committee consulted with Compensia on a range of issues relating to
executive compensation and engaged Compensia to review the results of executive
compensation studies and analyses conducted by Company management. Compensia serves at the discretion of the Committee and
provides services only to the Committee. Compensia regularly meets with the
Committee both with and without management present. The Committee regularly
reviews its advisers’ independence status against the specific independence
factors contained in the rules of the Securities and Exchange Commission and the
related New York Stock Exchange corporate governance listing standards and has
determined that no relationship or conflict of interest exists that would
preclude Compensia from independently advising the Committee.
7
Table of Contents
Role of Management
– The Committee reviews recommendations made by the CEO on
various executive compensation matters, including executive compensation program
design, annual corporate performance metrics, bonus funding target levels, and
evaluations of corporate and executive officer performance. Other members of the
Company’s management team provide the Committee with the Market Data as well as
data and information relating to various executive compensation matters. In
addition, our CEO makes individual compensation recommendations to the Committee
for our executive officers, other than for himself. While the Committee
considers all recommendations made by the CEO, ultimate authority for all
compensation decisions regarding our executive officers, other than for our CEO,
rests with the Committee and, in the case of our CEO, rests with the independent
members of the Board of Directors. Certain members of the Company’s executive
management team, including our CEO and CFO, attend Committee meetings and
participate in the Committee’s discussions and deliberations. However, these
individuals are not present when the Committee or the independent members of the
Board of Directors discusses and determines their compensation. At each meeting,
the Committee also may choose to meet in an executive session without members of
management present and may meet without any members of management present at any
time.
Say on Pay
– At the Company’s 2015 Annual Meeting of Stockholders,
approximately 97% of the vote cast on the non-binding advisory vote on our
executive compensation program supported the compensation of our named executive
officers. In light of this voting result, and after careful consideration by the
Committee, we made no significant changes to our executive compensation program
in Fiscal 2016.
Performance Evaluation Process
Our executive compensation program is
guided by and reflects a “pay-for-performance” philosophy. For Fiscal 2016, we
followed our established and formal annual performance review and evaluation
process under which the individual performance of our executive officers is
reviewed by our CEO with the Committee. Each executive officer is evaluated by
our CEO based on demonstrated leadership skills, individual contributions to the
success of the Company during the fiscal year and results against any
pre-established annual performance objectives. Our CEO then prepares performance
evaluations for each of our executive officers detailing their performance for
the prior fiscal year. Upon the completion of the evaluation process, typically
in June, our CEO meets with the Committee to review and discuss his evaluation
of executive officer performance which is then taken into account in connection
with compensation decisions with respect to such executives as described further
below.
Executive Compensation Review and
Approval Process
As part of the annual performance
evaluation process, the Committee evaluates the recommendations of our CEO for
our executive officers, including base salary adjustments, bonus awards and
equity awards. In making these recommendations, our CEO takes into account the
following factors:
|
●
|
The median compensation levels from the Market Data for each
element of direct compensation (i.e., salary, bonus and equity awards) for
each of our executive officers;
|
|
●
|
The annual performance of each executive officer based on our CEO’s
assessment of his or her contributions to our overall performance,
including the ability of the executive officer to successfully lead his or
her functional organization and to work effectively across the entire
organization;
|
|
●
|
The scope of each executive officer’s role and the assumption of
any additional duties and responsibilities by the executive officer during
the fiscal year;
|
|
●
|
Internal compensation equity among our executive officers;
|
|
●
|
Our Company performance against the performance goals and
objectives established by the Committee and the Board of Directors for the
fiscal year; and
|
|
●
|
Our Company performance for the fiscal year against the Peer Group.
|
In making his compensation
recommendations to the Committee, our CEO considers each of the above factors
and no single factor is determinative.
Through the performance evaluation and
executive compensation review process, the Committee reviews the performance
evaluations, discusses the individual performance of each executive officer,
reviews the compensation recommendations of our CEO and approves the
compensation for our executive officers.
CEO Performance Evaluation
With respect to the performance
evaluation and compensation review process for our CEO, the independent members
of the Board of Directors conduct a review of our CEO’s performance against his
objectives for the fiscal year that were previously reviewed and approved by the
Committee and the independent members of the Board. The CEO generally provides a
summary of his results against objectives and the Committee is also provided
with data regarding the Company’s performance as compared to the performance of
the Peer Group. The Committee and the independent members of the Board of
Directors then review the CEO’s performance results against his objectives and
consider the CEO’s compensation in light of that performance evaluation.
Compensation of the Chief Executive
Officer
The Committee recognizes that special
scrutiny is applied to the compensation of the Chief Executive Officer, as the
most highly compensated of the named executive officers and the primary leader
of the company. The Committee believes that the total compensation opportunity
for Mr. Gacek, our Chief Executive Officer, was both appropriate and
performance-based in Fiscal 2016.
8
Table of Contents
In Fiscal 2016, due to
factors including stock price and revenue declines, the total realizable
compensation actually paid to Mr. Gacek was less than his total target
compensation. For purposes of this CD&A, total realizable pay is defined as
the sum of the base salary, actual earned short-term cash incentive payments,
actual time-based equity awards granted, and actual equity awards that become
eligible to vest based on performance (as measured based on the value of such
awards as of March 31, 2016). Total target compensation is defined as the sum of
the base salary, target short-term cash incentives, and target equity awards
that could become eligible to vest based on service or performance (as measured
based on the grant date value of such awards) during the fiscal year.
Of Mr.
Gacek’s total 2016 compensation opportunity, 50% is tied to both
performance-based equity and short-term cash incentives. Due to the company
financial performance previously described, Mr. Gacek did not receive any
portion of his performance-based compensation in Fiscal 2016. The following
graph further illustrates that Mr. Gacek’s Fiscal 2016 Total Realizable
Compensation was 32.4% of his Fiscal 2016 Total Target Compensation.
Elements of Compensation
C
onsistent with
o
ur compensatio
n
philosophy an
d
objectives, the Company prov
i
des a
mix of co
m
pensation ele
m
ents that emph
a
sizes
annual
c
ash incentives
a
nd long-term e
q
uity
incentives. Our executive
c
ompensation pr
ogram
consists
o
f base salary, a
n
annual bonus
opportunity,
e
quity awards with both time
a
n
d performance-
b
ased vesting,
m
inimal perquis
i
tes
and certain other benefits i
n
cluding health and welfare
b
enefits and cha
n
ge of control a
n
d severance pr
o
tection.
Base Salary
Overview
B
ase salaries are set competitive
l
y to
attract and
r
etain executive talent while co
m
pensating our
n
amed executive officers for thei
r
day-to-day responsibilities.
T
he base salaries are
typically r
e
viewed annual
l
y in June and
m
ay be
adjusted in accordance
w
ith individual
p
erformance,
m
arket
alignme
n
t, company per
f
ormance, prom
o
tions
or an incr
e
ased level of responsibility. As in previous years, the Committ
e
e continues t
o
generally posi
t
ion
the base salaries of our Chi
e
f Executive Of
f
icer
and other e
xecutive
officer
s
at market med
i
an
based on th
e
Peer Group
d
ata and other b
e
nchmark data f
r
om other comp
e
nsation survey
s
.
Base Salary Adjustments Made in Fiscal 2016
|
Named Executive
|
|
|
|
|
|
Increase
|
|
|
|
Officer
|
|
Title
|
|
Fiscal 2015 Salary
|
|
%
|
|
Fiscal 2016 Salary
|
|
Jon W. Gacek
|
|
President & CEO
|
|
$600,000
|
|
—%
|
|
$600,000
|
|
Christopher S. Willis
(1)
|
|
Interim SVP &
CFO
|
|
$—
|
|
—%
|
|
$237,505
|
|
William C. Britts
|
|
SVP, WW Sales &
Marketing
|
|
$370,004
|
|
—%
|
|
$370,004
|
|
Robert S. Clark
|
|
SVP, Product
Operations
|
|
$370,000
|
|
8.11%
|
|
$400,000
|
|
Geoffrey G. Stedman
(1)
|
|
SVP, StorNext
Solutions
|
|
$—
|
|
—%
|
|
$295,000
|
|
Linda M. Breard
|
|
Former SVP & CFO
|
|
$360,000
|
|
3.61%
|
|
$373,000
|
(1)
Mr. Willis
and Mr. Stedman were not among the named executive officers in
2015.
9
Table of Contents
The Committee agreed that
Mr. Gacek’s base salary was aligned with the median base salary of the Company’s
Peer Group; therefore Mr. Gacek did not receive a base salary increase in Fiscal
2016.
The Committee evaluated the
recommendation of Mr. Gacek to increase base salaries for Mr. Clark and Ms.
Breard. The recommendation of Mr. Gacek to raise the base salaries of these
named executive officers was based on the following considerations: (i) this
increase brings the base salary of each of these named executive officers to a
level that is approximately at the market median for comparable executive
officer positions, (ii) is reflective of the role and contribution of each
within the Company, (iii) provides each with a competitive base salary that will
assist the Company in retaining executive talent, and (iv) maintains internal
equity for comparable executive positions. The Committee determined that a base
salary increase for Mr. Clark of 8.11% and Ms. Breard of 3.61% was appropriate.
Mr. Gacek reviewed the base salary for Mr. Britts in comparison to the Company’s
Peer Group. Mr. Gacek recommended and the Committee agreed that Mr. Britts’ base
salary was aligned with the median base salary and therefore made no further
recommendations for a Fiscal 2016 adjustment.
For purposes of Fiscal 2016
compensation, Mr. Gacek reviewed the base salaries for Mr. Willis, prior to his
position as interim SVP & CFO, and Mr. Stedman based on a combination of
market data and end of year performance. The Committee agreed to the Fiscal 2016
salaries for Mr. Willis and Mr. Stedman as recommended by Mr. Gacek.
Annual Incentive
Plan
Overview of Annual
Incentive Plan
All employees of the
Company participate in the Company’s annual incentive plan (the “Company Bonus
Plan”). The annual incentive target is set as a percentage of the employee’s
base salary and earned only when pre-established corporate metrics are achieved.
As part of the Company Bonus Plan, our executive officers are eligible to earn
annual incentives through the Company’s Executive Officer Incentive Plan (the
“Executive Officer Incentive Plan”) which was reapproved by our stockholders at
the Company’s 2012 annual stockholders meeting. In addition to the Executive
Officer Incentive Plan and as of August 2013, in connection with his assumption
of the role as Senior Vice President, Worldwide Sales and Marketing, Mr. Britts
also participates in the Company’s Sales Compensation Plan which provides him
with the opportunity to earn sales commissions based on the Company’s revenue.
The purpose of Mr. Britts’ participation in this plan is drive increased revenue
growth and directly linking a portion of Mr. Britts target total cash to the
Company’s financial performance.
The Executive Officer
Incentive Plan is structured to support our strategic business plan and reflects
the Company’s underlying business conditions. The Executive Officer Incentive
Plan is intended to provide competitive annual incentive compensation
opportunities to our executive officers while supporting our pay-for-performance
philosophy by directly tying annual cash incentive compensation levels to both
corporate and individual performance.
The Executive Officer
Incentive Plan provides for the funding of an annual incentive pool based upon
the achievement of one or more pre-established financial or operational
performance objectives. If the minimum level of performance is achieved under
the Company Bonus Plan, and the Company Bonus Plan pool is funded, the Executive
Officer Incentive Plan is also funded based on the proportion of the total
funded amount of the Company Bonus Plan allocated to the participants in the
Executive Officer Incentive Plan. Our executive officers are eligible to receive
discretionary incentive awards based on a combination of the level of Executive
Officer Incentive Plan funding, their individual target annual incentive award
opportunity and their individual performance for the fiscal year.
Target Annual
Incentive Award Opportunity
Each executive officer has
a target annual incentive award opportunity under the Executive Officer
Incentive Plan that is expressed as a percentage of his or her base salary.
Target annual incentive awards are reviewed, set, and approved annually as part
of our executive compensation review. Annual incentive targets are compared to
market data including the Peer Group and set approximately at market median;
including with respect to the Fiscal 2016 target annual incentive award
opportunity for each named executive officer. In addition to the annual
incentive, Mr. Britts’ has a targeted sales commission opportunity approved by
the Committee and deemed to be market competitive.
|
Named Executive Officer
|
Title
|
Fiscal 2015 Target
|
Fiscal 2016 Target
|
|
Jon W. Gacek
|
President & CEO
|
100%
|
100%
|
|
Christopher S. Willis
|
Interim SVP &
CFO
|
—%
|
35%
|
|
William C. Britts
(1)
|
SVP, WW Sales &
Marketing
|
50%
|
50%
|
|
Robert S. Clark
|
SVP, Product
Operations
|
50%
|
50%
|
|
Geoffrey G. Stedman
|
SVP, StorNext
Solutions
|
—%
|
50%
|
|
Linda M. Breard
|
Former SVP & CFO
|
50%
|
50%
|
(1)
In addition
to the target annual incentive award opportunity under the Executive Officer
Incentive Plan, in August, 2013, the Committee approved a $200,000 annual
commission target for Mr. Britts (described further below).
The Committee determined
that the target annual incentive award opportunities for all of the named
executive officers were generally aligned with the market median. The Fiscal
2016 incentive targets for Mr. Willis and Mr. Stedman as recommended by Mr.
Gacek and approved by the Committee were consistent with market median. Although
each named executive officer has an annual incentive target opportunity, actual
incentive awards for our executive officers under the Executive Officer
Incentive Plan may be above or below the established target annual incentive
award opportunities, and may be eliminated entirely, depending on actual Company
and individual performance, as determined by the
Committee, in its discretion; provided, however, that in no event may an award
to any executive officer under the Executive Officer Incentive Plan exceed 150%
of the executive officer’s annual incentive target opportunity.
10
Table of Contents
Performance Metrics and Targets
Under Executive Officer Incentive Plan for Fiscal 2016
For Fiscal 2016, as in Fiscal 2015, the
Committee approved the use of one financial performance metric, non-GAAP
operating income for the Company Bonus Plan, including under the Executive
Officer Incentive Plan. While the plan has a single metric, the focus on
operating income in the bonus plan is balanced by a focus on revenue growth in
the long term incentive plan and is a critical measure of success for the fiscal
year. The Committee continues to believe that non-GAAP operating income is an
appropriate measure of our financial performance, as it reflects the level of
growth resulting from the successful execution of our annual operating plan
consistent with producing an appropriate return for our stockholders and
satisfying our obligations to our debt holders. (For purposes of the Company
Bonus Plan, “non-GAAP operating income” is defined as operating income reduced
by acquisition expenses, amortization of intangibles, Crossroads patent
litigation costs, goodwill impairment, outsourcing transition costs, proxy
contest and related costs, restructuring charges, share-based compensation
charges and Symform expenses, net.)
The Company Bonus Plan provides for the
funding of a single pool for all employees based upon the achievement of
pre-established non-GAAP operating income target performance levels. The target
performance levels for Fiscal 2016 were set at the beginning of the fiscal year
in conjunction with the approval of our annual operating plan. The annual
operating plan is considered and discussed extensively by our Board and senior
management before it is approved by the Board. The annual non-GAAP operating
income target performance level for Fiscal 2016 was set at $38.0 million. Based
on actual Fiscal 2015 non-GAAP operating income of $37.7 million, the Committee
believed that the achievement of this target level of operating income was
consistent with the Company’s continuing evolution in becoming a market leader
in scale-out storage, archive and data protection and achievement of this target
level would require a high level of performance by our CEO, executive officers
and all other employees.
Funding of Executive Officer
Incentive Plan
For Fiscal 2016, the Committee agreed
to fund the Company Bonus Plan based on the achievement of certain levels of
non-GAAP operating income performance. The Committee provided that no funding
for incentives would occur unless and until non-GAAP operating income exceeded
$47.0 million. If this target level of performance was achieved, total funding
under the Company Bonus Plan would equal $5.0 million. The Committee also
determined that as the Company’s performance increased above the operating
income performance target level, the Company would fund the incentive pool with
approximately $0.45 of every $1.00 of non-GAAP operating income earned above
$47.0 million. Provided an incentive pool is funded for the Company Bonus Plan,
actual bonuses would be paid at 30% of target once the pool is funded at $5.0
million and continue to increase on a linear basis as non-GAAP operating income
increases. While all bonuses are capped at 150% of target, this requires
significant over achievement of company performance. Our CEO approves incentive
awards for our executive officers (other than himself) under the Executive
Officer Incentive Plan, based on the total level of incentive funding, the
individual target annual incentive award opportunities and on his assessment of
their individual performance for the fiscal year. The Committee ultimately
approves all incentive awards to our executive officers under the Executive
Officer Incentive Plan and is not bound by the recommendations of our CEO. The
independent members of the Board of Directors determine the incentive award, if
any, payable to our CEO under the Executive Officer Incentive Plan from the
funded incentive pool.
Following the completion of Fiscal
2016, the Committee compared our actual non-GAAP operating income results to the
annual target performance levels. Because our reported Fiscal 2016 non-GAAP
operating income of $5.6 million did not exceed the minimum performance levels
necessary to begin funding the incentive pool, the Committee concluded that an
incentive pool would not be funded under the Company Bonus Plan for Fiscal 2016.
As a result, no annual incentives were paid to executives or any other employees
under Executive Officer Incentive Plan including the Company Bonus Plan for
Fiscal 2016.
Sales Compensation Plan for
Fiscal 2016
Beginning August 2013, when assuming
the role of Senior Vice President, Worldwide Sales and Marketing, Mr. Britts
participated in the Company’s Sales Compensation Plan. The Sales Compensation
Plan is a standard commission plan in which all of the Company’s commissioned
employees participate and which provides for commission payments based upon
sales of the Company’s products and the attainment of specified individual
quotas. Commission payments for Mr. Britts are based on the sale of the
Company’s branded products and branded service. Mr. Britts’ quota for Fiscal
2016 was $509.0 million. During Fiscal 2016, Mr. Britts earned total commissions
of $30,814 which was below his annual commission target of $200,000. Quota and
commission targets for Mr. Britts were based on weightings between various
strategic product groups and other revenue.
Clawback Policy
In April 2015, the Committee approved
and the Company adopted a clawback policy for cash incentive/bonus compensation
to executive officers if the Company is required to provide a material
restatement of its financial statements for any of the prior three fiscal years
due to fraud or misconduct by an executive officer. This policy and per Item
402(b)(2)(viii) of Regulation S K, entitles the Company to recover excess
compensation paid to an Executive Officer as determined by the Board. This
policy will be reviewed and modified, if necessary, once the SEC adopts final
rules implementing the requirement of Section 954 of the Dodd-Frank Act.
Equity
Awards
Overview of Annual Equity Award
Program
Historically, the cash compensation of
our executive officers has been supplemented with equity awards under the
Company’s long-term incentive plan that tie their overall compensation to the
performance of the Company’s Common Stock over a period of time. Equity awards
are granted to our executive officers to (i) provide at-risk equity compensation
consistent with our pay-for-performance philosophy and (ii) align the interests
of our executive officers with those of our stockholders by providing them with
significant equity stakes in the Company. The Committee determines, on a
discretionary basis, whether an equity award should be granted, the form of any
equity award and the number of shares of the Company’s
Common Stock subject to the equity award.
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Establishment of Stock Pool for
Annual Equity Awards
Each fiscal year, as part of the
development and approval of the Company’s annual compensation program,
management recommends, and the Committee approves, a stock pool for the purpose
of granting annual equity awards to our executive officers and other eligible
employees. In establishing the size of this stock pool, the following factors
are considered:
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The Market Data regarding the
size of competitive equity pools;
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The Market Data regarding the competitive size and fair value of
equity awards provided to similar executive officers and other employees;
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The resulting impact the stock pool would have on our annual and
three-year average burn rates (“burn rate” is defined as the number of
shares of the Company’s Common Stock subject to stock options granted
during the fiscal year plus the number of shares of the Company’s Common
Stock subject to restricted stock unit awards granted during the fiscal
year, with the number of restricted stock units multiplied by the
appropriate ISS burn-rate multiplier, divided by the average number of
shares of the Company’s Common Stock outstanding during the fiscal year);
and
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The impact of the stock pool on the remaining shares of stock
available for grant under the Company’s stockholder-approved long-term
incentive plan.
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Form of Annual Equity Awards
For the past several years, in an
on-going effort to reduce the dilution, burn rate, overhang and financial
accounting compensation expense resulting from the use of equity awards, the
Committee has been granting equity awards in the form of restricted stock units.
Additionally, to support the Company’s efforts to retain its top executive
talent, the Committee has favored granting restricted stock units with
service-based vesting because restricted stock units have some financial value
regardless of stock price performance and therefore serve as a valuable
retention vehicle.
In Fiscal 2014, the Committee reviewed
market and industry-wide best practices and determined that a portion of the CEO
equity awards should be more directly tied to Company performance and
achievement of specified performance targets. To strengthen this alignment, more
than 50% of the equity awards granted to Mr. Gacek were performance-based
restricted stock units that would vest only if defined performance measures were
achieved. In Fiscal 2015, the Committee expanded the use of performance-based
restricted stock units to all vice-presidents and executive officers and this
practice continued for Fiscal 2016. The Committee believes this strategy of
granting equity awards in the form of both service-based and performance-based
restricted stock units serves the purposes of retaining executive officers and,
consistent with our pay-for-performance philosophy, incenting and rewarding them
for performance, and that it also aligns the interests of our executive officers
with those of its stockholders.
Vesting
In Fiscal 2016, as a further effort to
reduce dilution, burn rate and overhang, and to align with market best
practices, the Committee agreed to move the vesting schedule of the time-based
RSUs from a three-year vesting schedule to a four-year vesting duration. As a
result, any time-based equity awards granted in Fiscal 2016 to our CEO, named
executive officers, or other equity recipients, other than our Directors, are
subject to vest in equal increments over four-years. Performance-based equity
awards continue to vest annually over a three-year vesting schedule contingent
upon the Company achieving pre-established performance goals in Fiscal 2016.
Size/Value of Annual Equity
Awards
In determining the size of the annual
equity awards to be granted individually to our executive officers, the
Committee does not establish specific target equity award levels for them.
Instead, the Company develops annual equity award grant guidelines for the
individual grants. The equity award grant guidelines are developed based on the
number of shares of the Company’s Common Stock that are available for the
granting of equity awards to our executive officers and incorporate a range that
permits variation in the individual grants based on different levels of
individual performance. Using these guidelines, the Committee reviews the
recommendations by the CEO regarding the size of the equity award to be granted
to each of our executive officers (other than with respect to his own award).
The recommendations regarding the size of the equity award for each individual
executive officer may vary within the established guidelines based on the
following factors:
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Individual performance of each executive officer for the prior
fiscal year;
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Company financial performance for the prior fiscal year;
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The grant date fair value of equity awards granted to executive
officers in similar positions in technology companies of similar size (the
“grant date fair value” is equal to the number of restricted stock unit
awards multiplied by the market price of the Company’s Common Stock on the
date of grant;
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Internal consistency and comparability in terms of the size of the
equity awards among the executive officers; and
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The number, type and current retentive value of the outstanding
equity awards held individually by each of the executive officers.
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Although our philosophy is to generally
target the market median equity award value for our annual equity awards, based
on the Market Data, when making equity awards to our executive officers, the
value of the resulting equity awards may be above or below the market median
award value depending upon the factors noted above as well as the Company’s
stock price at the time the awards are granted.
The Committee reviews the
recommendations of our CEO, including the application of the aforementioned
factors to each of our executive officers and ultimately approves the equity
awards for the executive officers. The independent members of the Board of
Directors apply the same factors in determining the size and form of the equity
award for our CEO.
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Fiscal 2016 Annual
Equity Awards
Using the factors
established for purposes of determining the size of individual equity awards, as
noted above, the Committee approved the following annual equity awards to the
named executive officers in Fiscal 2016 (with the number of performance-based
restricted stock units shown at target levels):
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Executive
Officer
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Title
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Restricted Stock
Units
Awarded
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Performance-based
Restricted Stock Units
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Jon W.
Gacek
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President & CEO
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445,000
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500,000
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Christopher S.
Willis
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Interim SVP & CFO
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45,000
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19,286
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William C.
Britts
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SVP, WW Sales & Marketing
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160,000
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106,667
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Robert S.
Clark
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SVP, Product Operations
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160,000
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106,667
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Geoffrey G.
Stedman
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SVP, StorNext Solutions
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160,000
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106,667
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Linda M.
Breard
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Former SVP & CFO
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100,000
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*
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66,667
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*
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*Ms. Breard’s fiscal 2016
equity awards were forfeited upon her departure from Quantum in January 2016.
Mr. Gacek
In determining the equity
award for Mr. Gacek for Fiscal 2016, the Committee reviewed the median grant
date fair value of equity awards and mix of performance-based and
non-performance-based equity from the Company’s Peer Group. Based on a
combination of factors including market data on equity mix for Peer Group CEOs,
the degree of difficulty in earning target awards, and the level of equity
compensation being considered, the Committee decided to grant Mr. Gacek more
equity in the form of performance-based RSUs to try and maintain the same total
equity value from Fiscal 2015 and in recognition of Mr. Gacek’s strong Fiscal
2015 results. To that end, the Committee decided that a 53/47 mix for Fiscal
2016 consisting of 500,000 performance-based and 445,000 time-based RSUs was
appropriate. At the time the Committee approved the grants, the Company’s stock
price was approximately $1.69. The equity grants had a total potential value of
approximately $1.6 million based on a stock price of $1.69 per share, which was
near the 50
th
percentile of the Peer Group for target performance.
For Fiscal 2016, Mr. Gacek could earn a minimum of 50% of the target
performance-based RSUs with a maximum award of 150% of target; however,
consistent with the Company’s plan, overachievement of performance must have
been met before performance-based equity could become eligible to vest.
The service-based
restricted stock unit award is scheduled to vest in equal annual installments
over four years on each anniversary of the grant date of July 1, 2015, subject
to continued employment. The performance-based RSUs are earned based on the
achievement of two goals, (i) non-GAAP operating income of $38.0M and (ii) an
internal revenue target. Upon attainment of these goals, 50% of target
performance-based RSUs are granted. Scaling on a linear basis from 50%,
additional shares are granted as revenue performance increases until a maximum
of 150% of target performance-based RSUs have been granted. The revenue target,
an internal target under the Company’s target operating model, was related to
individual product lines that the Company does not disclose publicly and
believes would be competitively harmful to disclose. For Mr. Gacek, 50% target
performance-based RSUs, or 250,000 shares grant upon the achievement of both
financial metrics with a maximum grant of 150% or 750,000 shares. Based on the
Company’s financial results as of March 31, 2016, the company did not achieve
the corporate operating income necessary for the performance-based RSUs to be
awarded. Mr. Gacek did not receive any portion of his target performance-based
equity for Fiscal 2016.
Other Named Executive
Officers
The Committee reviewed
recommendations made by Mr. Gacek and approved equity awards during Fiscal 2016
of 100,000 service-based restricted stock units to Ms. Breard (all of which were
forfeited upon termination) and 160,000 service-based restricted stock units to
each of Mr. Britts, Mr. Clark and Mr. Stedman. Mr. Willis was granted 45,000
service-based restricted stock units prior to his role as Interim SVP & CFO.
The grant guidelines established by the Company for the executive officers for
Fiscal 2016 ranged from 100,000 to 160,000 restricted stock units which will
vest in equal installments over four-years on each anniversary of the grant date
of July 1, 2015, subject to continued employment. Additionally, Mr. Gacek
recommended and the Committee approved 66,667 performance-based restricted stock
units to Ms. Breard (all of which were forfeited upon termination) and 106,667
performance-based restricted stock units to each of Mr. Britts, Mr. Clark, and
Mr. Stedman. Mr. Willis was granted 19,286 performance-based restricted stock
units as part of the annual equity grant as recommended by Mr. Gacek. These
grants represent an equity mix of 60% service-based awards and 40%
performance-based awards. At the time the grant guidelines were established and
the equity awards approved, the Company’s stock price was approximately $1.69.
Although the equity awards would have a combined value at grant ranging from
approximately $280,000 to $450,000 (for the named executive officers not in an
interim position), the realized value was expected to be substantially less as
the Company would need to significantly over-perform in order to earn awards at
target.
The Company performance
goals for all other executive officers are identical to that described for Mr.
Gacek. Based on the attainment of the financial goals all executive officers are
granted 50% of target performance-based RSUs with a maximum grant of 150% of
target. Based on the Company’s financial results as of March 31, 2016, the
corporate operating income target was not achieved and therefore no
performance-based restricted stock units became eligible to vest.
Mr. Gacek provided the
Committee with target annual equity awards for the other named executive
officers, which took into account (i) the leadership position of each named
executive officer, (ii) the named executive officer’s level of individual
performance, (iii) the role of each named executive officer and the scope of
their responsibilities, (iv) the Company’s financial performance for the prior
fiscal year, and (v) the current equity holdings of each named executive
officer.
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The Committee reviewed the
recommendations from Mr. Gacek for the executive officers in combination with
market data that compared the size of the internal equity awards to that of
comparable positions in companies of similar size. While it is always the
intention to keep the target value of internal equity comparable to market and
Peer Group medians, the Committee took into consideration other factors
including anticipated stock price growth, the financial performance of the
Company for the prior year. The Committee noted that the realized value was
expected to be below market median as the Company would need to significantly
over-perform in Fiscal 2016 in order for the performance-based restricted stock
units to reach target levels. The service-based restricted stock units granted
will vest in equal annual installments over four years while any
performance-based restricted stock units that are earned by the named executive
officers will vest in equal annual installments over three years.
Timing & Pricing of Equity
Awards
We do not have an established schedule
for the granting of equity awards. Instead, the Committee makes awards from time
to time as necessary. The Committee has instituted a policy that all equity
awards will be approved either at a regularly scheduled Committee meeting, with
the annual schedule of such meetings established prior to the beginning of the
fiscal year, or by unanimous written consent on the first day of each month, or
as close as reasonably possible to the first day of the month. The actual grant
date for equity awards under this policy is the later to occur of the first day
of the month or the day the last member of the Committee executes a written
consent approving in writing the equity award grant.
As required by the Company’s long-term
incentive plan, the exercise price for any stock option grants is set at not
less than the closing market price of our Common Stock on the date of grant or,
if the date of grant falls on a weekend or holiday, the closing price on the
immediately preceding business day.
Perquisites and Other Benefits
Perquisites
– We offer Company-paid financial counseling and tax
preparation services to our executive officers and non-executive vice
presidents. Our executive officers are entitled to receive up to $6,000 in their
initial year of participation, and an additional $3,500 per year thereafter to
reimburse them for the cost of such services. The Committee considers this
expense to be minimal and appropriate given the level of the executive officers’
responsibilities. Other than this perquisite and the non qualified deferred
compensation plan discussed below, we do not provide any other perquisites or
personal benefits to our executive officers that are not available to all other
full time employees.
Employee Stock Purchase
Plan
– We offer all employees, including our
executive officers, the ability to acquire shares of the Company’s Common Stock
through a tax-qualified employee stock purchase plan. This plan allows employees
to purchase shares of the Company’s Common Stock at a 15% discount relative to
the market price. The Committee believes that the Employee Stock Purchase Plan
is a cost efficient method of encouraging employee stock ownership.
Health and Welfare
Benefits
– We offer health, welfare, and
other benefit programs to substantially all full-time employees. We share the
cost of health and welfare benefits with our employees, the cost of which is
dependent on the level of coverage an employee elects. The health and welfare
benefits offered to our executive officers are identical to those offered to
other full time employees.
Qualified Retirement
Benefits
– All U.S.-based employees,
including our executive officers, are eligible to participate in the Company’s
tax-qualified 401(k) Savings Plan. Participants may defer cash compensation up
to statutory IRS limits and may receive a discretionary matching Company
contribution. The matching contribution for our executive officers is reported
in a footnote to the Summary Compensation Table. Participants direct their own
investments in the Company’s tax-qualified 401(k) Savings Plan, which does not
include an opportunity to invest in shares of the Company’s Common Stock.
Non-Qualified Deferred Compensation
Plan
– We maintain a non-qualified deferred
compensation plan which allows select employees, including our executive
officers, to contribute a portion of their base salary and annual bonus payouts
to an irrevocable trust for the purpose of deferring federal and state income
taxes. Participants direct the deemed investment of their deferred accounts
among a pre-selected group of investment funds, which does not include shares of
the Company’s Common Stock. The deemed investment accounts mirror the investment
options available under the Company’s 401(k) Savings Plan. Participants’
deferred accounts are credited with interest based on their deemed investment
selections. Participants may change their investment elections on a daily basis,
the same as they may under the Company’s 401(k) Savings Plan. We do not make
employer or matching contributions to the deferred accounts under the
non-qualified deferred compensation plan. We offer the non-qualified deferred
compensation plan as a competitive practice to enable us to attract and retain
top talent. During Fiscal 2016, none of our executive officers participated in
the non-qualified deferred compensation plan.
Change of Control Severance Policy,
Employment Agreements and Severance Agreements
Change of Control Agreements
In the third quarter of Fiscal Year
2016, we entered into amended and restated change of control agreements with our
executive officers, whereby in the event of a “change of control” of the
Company, which is defined to include, among other things, a merger or sale of
all or substantially all of the assets of the Company or a change in the
composition of the Board of Directors occurring within a 24 month period as a
result of which fewer than a majority of the directors are Incumbent Directors
(as defined in the Change of Control Agreement), and, within 12 months of the
change of control, there is an “Involuntary Termination” of such executive
officer’s employment, then the executive officer is entitled to specified
payments and benefits, subject to the executive officer’s execution of a release
of claims in favor of the Company. The agreements define an “Involuntary
Termination” to include, among other things, any termination of employment of
the executive officer by the Company without “cause” or a significant reduction
of the executive officer’s duties without his or her express written consent.
The change of control agreements do not provide for the payment of any tax
gross-up to offset any excise tax incurred as a result of any payment under the
agreements.
The change of control agreements also
provide that, in the event an executive officer brings an action to enforce or
effect his or her rights under the agreement, then Quantum will advance all
reasonable attorneys’ fees incurred by the executive officer in connection with
the action. The arbitrator in the action will determine whether or not the
executive officer is the prevailing party. If Quantum is the prevailing party,
the arbitrator will determine
whether any portion of the advanced payments will be required to be repaid by
the executive officer to Quantum.
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The purpose of these change
of control agreements is to ensure that we will have the continued dedication of
our executive officers by providing such individuals with compensation
arrangements that are competitive with those of the executives of the companies
in our Peer Group, to provide sufficient incentive to the individuals to remain
employed with us, to enhance their financial security, as well as protect them
against unwarranted termination in the event of a change of control of the
Company. The Board of Directors believes that this policy serves the best
interests of stockholders because it eliminates management’s self-interest
considerations during a potential change of control at a cost that is both
appropriate and reasonable.
In January 2015, each named
executive officer, except for Mr. Gacek, entered into an agreement with Quantum
providing that, in the event the executive officer brings an action to enforce
or effect his or her rights under a written agreement relating to his or her
employment then Quantum will advance all reasonable attorneys’ fees incurred by
the executive officer in connection with the action. These agreements were
superseded by the Q3 FY 2016 amended and restated change of control agreements
to the extent they relate to the subject matter of those agreements, but remain
in effect with respect to other employment-related agreements. Our board of
directors and the Committee believed that these agreements for the advanced
payments were appropriate in order to provide the executives with additional
assurances that the benefits intended to be provided under employment agreements
would not be unduly denied upon a qualifying event thereunder.
The payments to each of our
named executive officers in the event of a triggering event as of the last day
of our fiscal year 2016 are set forth below under “Potential Payments Upon
Termination or Change of Control.”
Employment Offer
Letters
Except for the offer
letters with Mr. Gacek and Mr. Britts described below, we do not have employment
agreements with any of our named executive officers. Each of our named executive
officer’s employment is at will and the named executive officer may be
terminated at any time and for any reason, with or without notice.
We entered into an offer
letter with Mr. Gacek, effective April 1, 2011, in connection with his
appointment as President and CEO. This offer letter replaces the offer letter we
entered into with Mr. Gacek at the time Mr. Gacek was originally hired by the
Company in 2006. This offer letter provides for severance benefits in the event
of an involuntary termination of employment without cause (as defined in Mr.
Gacek’s change of control agreement) that is not associated with a change of
control of the Company, subject to his execution of a separation agreement and
general release.
We entered into an offer
letter with Mr. Britts at the time of his initial employment with Quantum. This
offer letter provides for certain severance benefits in the event of a
qualifying termination of employment that is not associated with a change of
control of the Company, subject to Mr. Britts’ execution of a separation
agreement and general release.
The purpose of the
severance benefits provided in these offer letters is to ensure that the Company
will have the continued dedication of Mr. Gacek and Mr. Britts by providing
sufficient incentive to them to remain with us and to enhance their financial
security. The Board of Directors believes that these offer letters serve the
best interests of stockholders because it enables us to secure the services of
Mr. Gacek and Mr. Britts at a cost that is both appropriate and reasonable.
Stock Ownership
Guidelines
We maintain stock ownership
guidelines for our CEO and for our non-employee directors. For our President and
CEO, these stock ownership guidelines require him to acquire and hold shares of
the Company’s Common Stock with a value at least equal to three times his annual
base salary. For our non-employee directors, these stock ownership guidelines
require them to acquire and hold shares of the Company’s Common Stock with a
value at least equal to three times the directors’ annual retainer. The
measurement date for compliance with the stock ownership guidelines is the last
day of each fiscal year. The stock ownership guidelines are required to be met
by the later of five years from (i) the date the guidelines were adopted or (ii)
the date an individual first becomes subject to the guidelines. As of the last
day of Fiscal 2016, Mr. Gacek, who was appointed our President and CEO on the
first day of Fiscal 2012, and Mr. Fuller, who was first appointed to the Board
of Directors during Fiscal 2015, had not yet met the applicable stock ownership
guidelines. However, in each case, these individuals have several years in which
to reach the ownership requirement. While the Committee encourages executive
share ownership for our other executive officers, we do not currently require
those executive officers to own shares of our stock with a minimum stated value.
Anti-Hedging and
Anti-Pledging Policy
We maintain an insider
trading policy which expressly prohibits buying Company shares on margin or
using or pledging owned shares as collateral for loans and engaging in
transactions in publicly-traded options, such as puts and calls, and other
derivative securities with respect to the Company’s securities. This extends to
any hedging or similar transaction designed to decrease the risks associated
with holding Company securities. All of our executive officers are subject to
the Company’s insider trading policy.
Tax and Accounting
Considerations
Section 162(m) of the
Internal Revenue Code
Section 162(m) of the
Internal Revenue Code (“Section 162(m)”) imposes limitations on the
deductibility for federal income tax purposes of remuneration in excess of $1
million paid to certain executive officers in a taxable year. Generally,
remuneration in excess of $1 million may only be deducted if it is
“performance-based compensation” within the meaning of the Internal Revenue
Code.
The Executive Officer
Incentive Plan allows the Committee to pay compensation that qualifies as
performance-based compensation under Section 162(m). While we currently seek to
preserve deductibility of compensation paid to our executive officers under
Section 162(m), flexibility to provide compensation arrangements necessary to
recruit and retain outstanding executives is maintained. In particular, full
preservation of tax deductibility may not be possible if non-performance-based
restricted stock units continue to play a role in our executive compensation
program since such restricted stock units are not deemed to be performance-based
under
Section 162(m). With respect to our executive
officers, no portion of their compensation in Fiscal 2016 was determined to be
non-deductible under Section 162(m).
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Table of Contents
Section 409A of the
Internal Revenue Code
Section 409A of the
Internal Revenue Code (“Section 409A”) imposes additional significant taxes in
the event that an executive officer, director or other service provider receives
deferred compensation that does not meet the requirements of Section 409A.
Section 409A applies to traditional nonqualified deferred compensation plans,
certain severance arrangements, and certain equity awards. As described above,
we maintain a non-qualified deferred compensation plan, have entered into
severance and change of control agreements with our executive officers and grant
equity awards. However, to assist in the prevention of adverse tax consequences
under Section 409A, we structure our equity awards in a manner intended to
comply with or be exempt from the applicable requirements of Section 409A. With
respect to our non-qualified deferred compensation plan and the severance and
change of control agreements, we have determined that the plan and such
agreements are in compliance with or are exempt from Section 409A.
Accounting
Considerations
We follow the applicable
accounting rules for our equity-based compensation. The applicable accounting
rules require companies to calculate the grant date fair value of equity-based
awards. This calculation is performed for accounting purposes and reported in
the compensation tables, even though the equity award recipients may never
realize any value from their awards. The applicable accounting rules also
require companies to recognize the compensation cost of their equity-based
awards in their income statements over the period that a recipient is required
to render service in exchange for the equity award. Compensation cost for
equity-based awards with performance conditions is recognized only when it is
probable that the performance conditions will be achieved.
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Table of
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Compensation Committee
Report
(1)
The Leadership and
Compensation Committee of the Board of Directors has reviewed and discussed the
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K
with management. Based on such review and discussions, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in this annual report on Form 10-K, as
amended.
Submitted by the Leadership
and Compensation Committee of the Board of Directors:
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MEMBERS OF THE LEADERSHIP AND
|
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COMPENSATION COMMITTEE
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David A. Krall, Chair
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Louis DiNardo
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David E. Roberson
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(1)
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This report of the
Leadership and Compensation Committee of the Board of Directors shall not
be deemed “soliciting material,” nor is it to be deemed filed with the
SEC, nor incorporated by reference in any filing of the Company under the
Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, whether made before or after the date hereof and
irrespective of any general incorporation language in any such
filing.
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Table of
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RISKS RELATED TO
COMPENSATION POLICIES AND PRACTICES
Annually, we conduct a risk
assessment of our compensation policies and practices for our employees,
including those relating to our executive compensation program, and discuss the
findings of this risk assessment with the Committee. The Committee directed
Compensia to conduct this assessment for us. Our risk assessment includes a
detailed analysis of our compensation programs in which employees at all levels
of the organization may participate, including our executive officers. We
believe that our compensation programs have been appropriately designed to
attract and retain talent and properly reward our employees. Generally, our
programs are designed to pay for performance and, thus, provide incentive-based
compensation that encourages appropriate risk-taking. These programs contain
various mitigating features, however, to ensure our employees, including our
executive officers, are not encouraged to take excessive or unnecessary risks in
managing our business. These features include:
Independent oversight of the
compensation programs by the Committee;
|
●
|
Discretion provided to the Committee to set targets,
monitor performance and determine final payouts;
|
|
|
|
|
●
|
Additional oversight of the compensation programs by a
broad-based group of functions within the Company, including Human
Resources, Finance and Legal and at multiple levels within the
Company;
|
|
|
|
|
●
|
A balanced mix of compensation programs that focus our
employees on achieving both short and long-term objectives, that include
both performance-based and non performance-based pay, and that provide a
balanced mix of cash and equity compensation;
|
|
|
|
|
●
|
An annual review by the Committee of target compensation
levels for our executive officers, including a review of the alignment of
executive compensation with performance;
|
|
|
|
|
●
|
Caps on the maximum funding under the Company’s annual
bonus program, including the Executive Officer Incentive Plan and the
Quantum Incentive Plan;
|
|
|
|
|
●
|
An insider trading policy which expressly prohibits
buying Company shares on margin or using or pledging owned shares as
collateral for loans and engaging in transactions in publicly-traded
options, such as puts and calls, and other derivative securities with
respect to the Company’s securities. This extends to any hedging or
similar transaction designed to decrease the risks associated with holding
Company securities;
|
|
|
|
|
●
|
Incentives focused on the use of reportable and
broad-based internal financial metrics (non-GAAP operating income and
revenue);
|
|
|
|
|
●
|
Pay positioning targeted at the market median based on a
reasonable competitive peer group and published surveys;
|
|
|
|
|
●
|
Multi-year
service-based vesting requirements with respect to equity awards; and
|
|
|
|
|
●
|
Risk mitigators, including stock ownership guidelines for
the CEO and Board of Directors and stock pledging policies are in
place.
|
Based on the assessment
conducted for Fiscal 2016, we believe that our compensation programs are not
likely to create excessive risks that might adversely affect the Company.
18
Table of
Contents
Summary Compensation
Table for Fiscal Years 2016, 2015 and 2014
The following table lists
the compensation for our named executive officers for Fiscal 2016.
SUMMARY COMPENSATION
TABLE
Name and
Principal
Position
|
|
Year
|
|
Salary
(1)
|
|
Bonus
(2)
|
|
Stock
Awards
(3)
|
|
Option
Awards
|
|
Non-Equity
Incentive
Plan
Compensation
(4)
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
(5)
|
|
All
Other
Compensation
(6)
|
|
Total
|
|
Jon
W. Gacek
|
|
2016
|
|
$
|
600,000
|
|
$
|
—
|
|
752,050
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,769
|
|
$
|
1,354,819
|
|
President and Chief Executive Officer
|
|
2015
|
|
$
|
600,000
|
|
$
|
—
|
|
1,224,375
|
|
$
|
—
|
|
$
|
301,210
|
|
$
|
—
|
|
$
|
11,031
|
|
$
|
2,136,616
|
|
|
|
2014
|
|
$
|
600,000
|
|
$
|
—
|
|
1,900,208
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3,500
|
|
$
|
2,503,708
|
|
|
|
Christopher S. Willis
|
|
2016
|
|
$
|
234,813
|
|
$
|
—
|
|
76,050
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,575
|
|
$
|
312,438
|
|
Interim Senior Vice President & CFO
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William C. Britts
|
|
2016
|
|
$
|
370,004
|
|
$
|
—
|
|
270,400
|
|
$
|
—
|
|
$
|
30,814
|
|
$
|
—
|
|
$
|
4,474
|
|
$
|
675,692
|
|
Senior Vice President, WW
Sales
|
|
2015
|
|
$
|
370,004
|
|
$
|
—
|
|
376,250
|
|
$
|
—
|
|
$
|
271,988
|
|
$
|
—
|
|
$
|
7,687
|
|
$
|
1,025,929
|
|
and Mktg
|
|
2014
|
|
$
|
364,619
|
|
$
|
—
|
|
312,750
|
|
$
|
—
|
|
$
|
62,000
|
|
$
|
—
|
|
$
|
8,412
|
|
$
|
747,781
|
|
|
|
Robert S. Clark
|
|
2016
|
|
$
|
391,923
|
|
$
|
—
|
|
270,400
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
6,262
|
|
$
|
668,585
|
|
Senior Vice President, Product Operations
|
|
2015
|
|
$
|
365,962
|
|
$
|
—
|
|
376,250
|
|
$
|
—
|
|
$
|
92,873
|
|
$
|
—
|
|
$
|
12,769
|
|
$
|
847,854
|
|
|
|
2014
|
|
$
|
350,962
|
|
$
|
—
|
|
312,750
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
7,771
|
|
$
|
671,483
|
|
|
|
Geoffrey G. Stedman
|
|
2016
|
|
$
|
289,615
|
|
$
|
—
|
|
270,400
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,428
|
|
$
|
561,443
|
|
Senior Vice President,
StorNext Solutions
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Linda M. Breard
|
|
2016
|
|
$
|
317,854
|
|
$
|
—
|
|
169,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
37,897
|
|
$
|
524,751
|
|
Former Senior Vice President & CFO
|
|
2015
|
|
$
|
357,308
|
|
$
|
—
|
|
301,000
|
|
$
|
—
|
|
$
|
90,363
|
|
$
|
—
|
|
$
|
8,000
|
|
$
|
756,671
|
|
|
|
2014
|
|
$
|
347,308
|
|
$
|
—
|
|
278,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
7,327
|
|
$
|
632,635
|
|
(1)
|
|
The amounts reported
in the Salary column for Fiscal 2016 represent the dollar value of the
cash base salaries earned in Fiscal 2016.
|
|
|
|
(2)
|
|
No bonuses were paid
to our named executive officers with respect to Fiscal 2016. Bonuses were
last paid for performance achieved in Fiscal 2015.
|
|
|
|
(3)
|
|
The amounts reported
represent the fair value, calculated in accordance with ASC Topic 718 for
share-based payment transactions and exclude the impact of estimated and
actual forfeitures related to service-based vesting conditions. The
assumptions used in the calculation of the value are disclosed under “Note
9: Stock Incentive Plans and Share-Based Compensation” in the Company’s
Annual Report on Form 10-K filed with the SEC on June 3, 2016. The fair
value of performance-based restricted units is based on the actual shares
earned after the close of the fiscal year. For Fiscal 2016, company
performance was not met and no performance-based restricted units were
earned for any officers including Mr. Gacek.
|
|
|
|
(4)
|
|
The amounts reported
in this column represent performance-based cash incentive payments paid
pursuant to Quantum’s Executive Officer Incentive Plan and may include
amounts earned in a given fiscal year but not paid until the subsequent
year. For Mr. Britts, the total amount reported includes a total cash
commission payment of $30,814 under the Fiscal 2016 Sales Compensation
Plan.
|
|
|
|
(5)
|
|
There is no Change in
Pension Value and no Non-Qualified Deferred Compensation Earnings
reportable as the Company does not maintain a defined benefit or actuarial
pension plan nor was there any compensation that was
deferred.
|
19
Table of
Contents
|
(6)
|
|
The amounts listed in
All Other Compensation column of the Summary Compensation Table for Fiscal
2016 consist of the following:
|
|
Name
|
|
401(k)
Matching
Contributions
(a)
|
|
Severance Payments
|
|
Financial
Planning
(b)
|
|
Vacation Paid
upon
Termination
(c)
|
|
Other
Comp
(d)
|
|
Jon
W. Gacek
|
|
$
|
2,769
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Christopher S. Willis
|
|
$
|
1,575
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
William C. Britts
|
|
$
|
4,474
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Robert S. Clark
|
|
$
|
2,562
|
|
$
|
0
|
|
$
|
3,500
|
|
$
|
0
|
|
$
|
200
|
|
Geoffrey G. Stedman
|
|
$
|
1,428
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Linda M. Breard
|
|
$
|
2,077
|
|
$
|
0
|
|
$
|
2,183
|
|
$
|
33,437
|
|
$
|
200
|
|
|
(a)
|
|
401(k) matching
contributions were made for the first quarter of FY2016 only.
|
|
|
(b)
|
|
Payments include
reimbursement for financial counseling and tax preparation
services.
|
|
|
(c)
|
|
Payments include
accrued vacation time paid out upon termination.
|
|
|
(d)
|
|
Payments include $200
reimbursement for fitness center membership.
|
|
|
|
|
|
(7)
|
|
Mr. Willis and Mr.
Stedman were not named executive officers in fiscal years 2014 or
2015.
|
Grants of Plan-Based
Awards for Fiscal Year 2016
The following table
presents information on plan-based awards granted to our named executive
officers during Fiscal 2016.
|
|
|
|
|
Estimated Future
Payouts Under
Non-Equity Incentive Plan Awards
(1)
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
(2)
|
|
All
Other
Stock
Awards:
Number
of Shares
of
Stock
or Units
(#)
(3)
|
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)
|
|
Exercise
or
Base
Price of
Option
Awards
($/Sh)
|
|
Grant
Date
Fair
Value of
Stock
and
Option
Awards
(4)
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
(5)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
|
|
|
|
Jon
W. Gacek
|
|
07/01/15
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
445,000
|
|
—
|
|
—
|
|
$
|
752,050
|
|
|
|
07/01/15
|
|
—
|
|
|
—
|
|
|
—
|
|
250,000
|
|
500,000
|
|
750,000
|
|
—
|
|
—
|
|
—
|
|
$
|
845,000
|
|
|
|
|
|
—
|
|
$
|
600,000
|
|
$
|
900,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher S. Willis
|
|
07/01/15
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
45,000
|
|
—
|
|
—
|
|
$
|
76,050
|
|
|
|
07/01/15
|
|
—
|
|
|
—
|
|
|
—
|
|
9,643
|
|
19,286
|
|
28,929
|
|
—
|
|
—
|
|
—
|
|
$
|
32,593
|
|
|
|
|
|
—
|
|
$
|
83,127
|
|
$
|
124,690
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William C. Britts
|
|
07/01/15
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
160,000
|
|
—
|
|
—
|
|
$
|
270,400
|
|
|
|
07/01/15
|
|
—
|
|
|
—
|
|
|
—
|
|
53,334
|
|
106,667
|
|
160,000
|
|
—
|
|
—
|
|
—
|
|
$
|
180,267
|
|
|
|
|
|
—
|
|
$
|
185,002
|
|
$
|
277,503
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
$
|
200,000
(6)
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert S. Clark
|
|
07/01/15
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
160,000
|
|
—
|
|
—
|
|
$
|
270,400
|
|
|
|
07/01/15
|
|
—
|
|
|
—
|
|
|
—
|
|
53,334
|
|
106,667
|
|
160,000
|
|
—
|
|
—
|
|
—
|
|
$
|
180,267
|
|
|
|
|
|
—
|
|
$
|
200,000
|
|
$
|
300,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geoffrey G. Stedman
|
|
07/01/15
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
160,000
|
|
—
|
|
—
|
|
$
|
270,400
|
|
|
|
07/01/15
|
|
—
|
|
|
—
|
|
|
—
|
|
53,334
|
|
106,667
|
|
160,000
|
|
—
|
|
—
|
|
—
|
|
$
|
180,267
|
|
|
|
|
|
—
|
|
$
|
147,500
|
|
$
|
221,250
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Linda M. Breard
|
|
07/01/15
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
100,000
|
|
—
|
|
—
|
|
$
|
169,000
|
|
|
|
07/01/15
|
|
—
|
|
|
—
|
|
|
—
|
|
333,334
|
|
66,667
|
|
100,000
|
|
—
|
|
—
|
|
—
|
|
$
|
112,667
|
|
|
|
|
|
—
|
|
$
|
186,500
|
|
$
|
279,750
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
20
Table of Contents
|
(1)
|
|
The amounts reported
reflect payout at target and maximum with a cap of 150% of
target.
|
|
|
|
(2)
|
|
Performance-based
Restricted Stock Units are earned only if the Company exceeds certain
revenue and operating income targets as of March 31, 2016. For Fiscal
2016, the Company had to have achieved significant performance for the
performance-based restricted stock units to be granted at threshold,
target or maximum levels resulting in 50%, 100% or 150% awards
respectively. Performance was not achieved for Fiscal 2016 and no
performance-based shares were earned for executives or any other
employees.
|
|
|
|
(3)
|
|
Restricted Stock
Units will vest (based on continued employment) in equal installments
annually over four years on each anniversary of the award’s grant
date.
|
|
|
|
(4)
|
|
The amounts reported
were computed in accordance with ASC 718, excluding the effect of
estimated and actual forfeitures. See “Note 9: Stock Incentive Plans and
Share-Based Compensation” in the Company’s Annual Report on Form 10-K
filed on June 3, 2016, regarding assumptions underlying the valuation of
equity awards. For performance-based restricted stock units, the report
Grant Date Fair Value of the shares is based on the value of the shares
granted on July 1, 2015.
|
|
|
|
(5)
|
|
The Company’s
Executive Officer Incentive Plan provides that no executive officer’s
actual award under the plan may, for any period of three consecutive
fiscal years, exceed $15 million. These awards are subject to an annual
payout cap of 150% of the executive officer’s annual bonus payment
target.
|
|
|
|
(6)
|
|
Amount reflects sales
commissions target payments pursuant to the Fiscal Year 2016 Sales
Compensation Plan based on the sale of the Company’s branded products and
branded services. The applicable quota for Fiscal 2016 was $509.0
million.
|
21
Table of
Contents
Outstanding Equity
Awards at Fiscal Year End 2016
The following table
provides information with respect to outstanding stock options and restricted
stock unit awards held by our named executive officers as of March 31, 2016.
|
Name
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
|
|
Number
of
Securities
Underlying
Unexercised
Options
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of Shares
or Units
of
Stock
That Have
Not
Vested
(#)
|
|
Market
Value of
Shares
or
Units of
Stock
That
Have Not
Vested
($)
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units, or
Other
Rights
That
Have
Not Vested
(#)
|
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Units, or
Other
Rights
That
Have
Not Vested
($)
|
|
|
(#)
|
|
(#)
|
|
|
Exercisable
|
|
Unexercisable
|
|
(#)
|
|
Jon
W. Gacek
|
|
1,300,000
|
(1)
|
|
|
|
|
|
$
|
2.52
|
|
4/1/2018
|
|
216,666
|
(3)
|
|
$
|
132,166
|
|
400,000
|
(6)
|
|
$
|
244,000
|
|
|
|
500,000
|
(2)
|
|
|
|
|
|
$
|
0.98
|
|
7/1/2016
|
|
500,000
|
(4)
|
|
$
|
305,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
445,000
|
(10)
|
|
$
|
271,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153,000
|
(5)
|
|
$
|
93,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher S.
Willis
|
|
90,000
|
(2)
|
|
|
|
|
|
$
|
0.98
|
|
7/1/2016
|
|
16,666
|
(7)
|
|
$
|
10,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,333
|
(4)
|
|
$
|
20,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
(10)
|
|
$
|
27,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,371
|
(5)
|
|
$
|
2,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William C. Britts
|
|
275,000
|
(2)
|
|
|
|
|
|
$
|
0.98
|
|
7/1/2016
|
|
75,000
|
(7)
|
|
$
|
45,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,666
|
(4)
|
|
$
|
101,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160,000
|
(10)
|
|
$
|
97,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,000
|
(5)
|
|
$
|
20,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert S. Clark
|
|
100,000
|
(8)
|
|
|
|
|
|
$
|
2.59
|
|
4/1/2017
|
|
75,000
|
(7)
|
|
$
|
45,750
|
|
|
|
|
|
|
|
|
|
37,500
|
(2)
|
|
|
|
|
|
$
|
0.98
|
|
7/1/2016
|
|
166,666
|
(4)
|
|
$
|
101,666
|
|
|
|
|
|
|
|
|
|
14,584
|
(9)
|
|
|
|
|
|
$
|
0.77
|
|
4/1/2016
|
|
160,000
|
(10)
|
|
$
|
97,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,000
|
(5)
|
|
$
|
20,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geoffrey G. Stedman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,000
|
(11)
|
|
$
|
50,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160,000
|
(10)
|
|
$
|
97,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,000
|
(5)
|
|
$
|
20,740
|
|
|
|
|
|
|
|
|
|
Linda M. Breard
|
|
187,500
|
(2)
|
|
|
|
|
|
$
|
0.98
|
|
4/28/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Granted 4/1/11; 25%
vested on 4/1/12, and remainder will vest 1/48
th
monthly,
subject to continued employment.
|
|
|
|
(2)
|
|
Granted 7/1/09; 25%
vested on 7/1/10, 50% vested on 7/1/11, 25% vested on 7/1/12.
|
|
|
|
(3)
|
|
Granted 9/1/13; vest
annually over three years beginning 9/1/13, subject to continued
employment.
|
|
|
|
(4)
|
|
Granted on 7/1/14;
vest annually over three years beginning 7/1/14, subject to continued
employment.
|
|
|
|
(5)
|
|
Granted on 7/1/14;
Shares earned on 3/31/15 as performance condition threshold was satisfied.
Vest annually over three years beginning 7/1/14, subject to continued
employment.
|
|
|
|
(6)
|
|
Granted on 9/1/13;
Vesting is dependent on Quantum’s common stock achieving certain 60-day
average stock price targets as of specified dates, which vest immediately
to two years after the specified dates, subject to continued employment.
200,000 shares canceled on each of 7/1/14 and 7/1/15 as performance
condition for first two performance periods had not been
satisfied.
|
|
|
|
(7)
|
|
Granted 7/1/13; vest
annually over three years beginning 7/1/13, subject to continued
employment.
|
|
|
|
(8)
|
|
Granted 4/1/10; 25%
vested on 4/1/11, and remainder will vest 1/48
th
monthly,
subject to continued employment.
|
|
|
|
|
|
(9)
|
|
Granted 4/1/09; 25%
vested on 3/1/10, and remainder will vest 1/48
th
monthly,
subject to continued employment.
|
|
|
|
(10)
|
|
Granted 7/1/15; vest
annually over four years beginning 7/1/15, subject to continued
employment.
|
|
|
|
(11)
|
|
Granted 4/1/14; vest
annually over three years beginning 4/1/14, subject to continued
employment.
|
Note: The table above uses
a price of $0.61 per share, the market price of the Company’s Common Stock as of
March 31, 2016, to calculate the market value of shares or units that have not
vested.
22
Table of
Contents
Option Exercises and
Stock Vested in Fiscal 2016
The following table
provides information on stock option exercises and restricted stock and
restricted stock unit vesting for our named executive officers during Fiscal
2016.
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
|
|
|
Name
|
|
Number
of
Shares Acquired
on Exercise (#)
|
|
Value Realized
on
Exercise ($)
|
|
Number of
Shares
Acquired on
Vesting (#)
|
|
Value
Realized on
Vesting ($)
(1)
|
|
|
|
Jon W. Gacek
|
|
—
|
|
—
|
|
543,167
|
|
$
|
917,952
|
|
|
|
Christopher S. Willis
|
|
—
|
|
—
|
|
48,853
|
|
$
|
82,562
|
|
|
|
William C. Britts
|
|
—
|
|
—
|
|
225,334
|
|
$
|
380,814
|
|
|
|
Robert S. Clark
|
|
—
|
|
—
|
|
242,000
|
|
$
|
408,980
|
|
|
|
Geoffrey G. Stedman
|
|
—
|
|
—
|
|
100,000
|
|
$
|
70,238
|
|
|
|
Linda M. Breard
|
|
—
|
|
—
|
|
196,934
|
|
$
|
332,818
|
|
|
(1)
|
|
The amount
reported is calculated by multiplying the number of shares that vested by
the market price of the underlying shares of the Company’s Common Stock on
the vesting date.
|
Non-qualified Deferred
Compensation
The Company’s Non-qualified
Deferred Compensation Plan is discussed under the section entitled “Compensation
Discussion and Analysis – Perquisites and Other Benefits – Non-Qualified
Deferred Compensation Plan.” In Fiscal 2016, no named executive officers elected
to defer compensation under this plan, and no named executive officer maintains
a balance in this plan.
Employment Agreements
and Change-in-Control Arrangements
We have entered into change
of control agreements with our executive officers, whereby in the event of a
“change of control” of the Company, which is defined to include, among other
things, a merger or sale of all or substantially all of the assets of the
Company or a change in the composition of the Board of Directors occurring
within a 24 month period as a result of which fewer than a majority of the
directors are Incumbent Directors (as defined in the Change of Control
Agreement), and, within 12 months of the change of control, there is an
“Involuntary Termination” of such executive officer’s employment, then the
executive officer is entitled to specified payments and benefits, subject to the
executive officer’s execution of a release of claims in favor of the Company.
The agreements define an “Involuntary Termination” to include, among other
things, any termination of employment of the executive officer by the Company
without “cause” or a significant reduction of the executive officer’s duties
without his or her express written consent. The change of control agreements do
not provide for the payment of any tax gross-up to offset any excise tax
incurred as a result of any payment under the agreements.
The benefits that would be
provided to Mr. Gacek, as President and CEO, in the event of both a change of
control of the Company and a qualifying termination of employment would be:
|
●
|
a lump sum payment equal to 200% of his then
established base compensation;
|
|
|
|
|
●
|
a lump sum payment equal to 200% of his target
annual bonus;
|
|
|
|
|
●
|
payment of COBRA premiums for twelve (12)
months; and
|
|
|
|
|
●
|
vesting of any unvested equity-based
compensation award then held by him.
|
The benefits that would be
provided to our other executive officers (except for Mr. Willis who would
receive lump sum payments as set forth below equal to 100% instead of 150%) in
the event of both a change of control of the Company and a qualifying
termination of employment would be:
|
●
|
a lump sum
payment equal to 150% of the executive officer’s then established base
compensation;
|
|
|
|
|
●
|
a lump sum payment equal to 150% of the
executive officer’s target annual bonus;
|
|
|
|
|
●
|
payment of COBRA premiums for twelve (12)
months; and
|
|
|
|
|
●
|
vesting of any unvested equity-based
compensation award then held by the executive officer.
|
23
Table of Contents
Mr. Gacek’s offer letter
provides for the lump sum payment of severance benefits equivalent to twelve
months of base salary and health benefits coverage for twelve months in the
event of an involuntary termination of employment without cause (as defined in
Mr. Gacek’s change of control agreement) that is not associated with a change of
control of Quantum, subject to his execution of a separation agreement and
general release. Mr. Britts’ offer letter provides for the lump sum payment of
severance benefits of 52 weeks of base salary in the event of a qualifying
termination of employment that is not associated with a change of control of the
Company, subject to his execution of a separation agreement and general release.
The following table
provides information concerning the estimated payments and benefits that would
be provided in the circumstances described above and under the agreements as
they existed on the last day of Fiscal 2016 for our named executive officers.
Payments and benefits are estimated assuming that the triggering event took
place on the last business day of Fiscal 2016 (March 31, 2016), outstanding
equity awards were not assumed or substituted for in connection with a change of
control of the Company, and the price per share of the Company’s Common Stock is
the closing price on the NYSE as of that date ($0.61). There can be no
assurance that a triggering event would produce the same or similar results as
those estimated below if such event occurs on any other date or at any other
price, or if any other assumption used to estimate potential payments and
benefits differs with respect to such triggering event. Due to the number of
factors that affect the nature and amount of any potential payments or benefits,
any actual payments and benefits may be substantially different.
|
|
|
|
|
Potential Payments
Upon:
|
|
Name
|
|
Type of
Benefit
|
|
Involuntary
Termination
within 12 Months After a
Change of Control
|
|
Involuntary
Termination
Not Associated with a
Change of Control
|
|
Jon W. Gacek
|
|
Cash Severance Payments
|
|
$
|
2,400,000
|
|
$
|
600,000
|
|
|
|
Vesting Acceleration
(1)
|
|
$
|
801,946
|
|
$
|
0
|
|
|
|
Continued Coverage of
|
|
|
|
|
|
|
|
|
|
Employee
Benefits
(2)
|
|
$
|
12,969
|
|
$
|
12,969
|
|
|
|
Total
Termination Benefits:
|
|
$
|
3,214,915
|
|
$
|
612,969
|
|
|
|
Christopher S. Willis
|
|
Cash
Severance Payments
|
|
$
|
320,632
|
|
$
|
0
|
|
|
|
Vesting Acceleration
(1)
|
|
$
|
60,615
|
|
$
|
0
|
|
|
|
Continued Coverage
of
|
|
|
|
|
|
|
|
|
|
Employee
Benefits
(2)
|
|
$
|
23,282
|
|
$
|
0
|
|
|
|
Total
Termination Benefits:
|
|
$
|
404,529
|
|
$
|
0
|
|
|
|
William C. Britts
|
|
Cash Severance Payments
|
|
$
|
832,509
|
|
$
|
370,004
|
|
|
|
Vesting Acceleration
(1)
|
|
$
|
265,756
|
|
$
|
0
|
|
|
|
Continued Coverage
of
|
|
|
|
|
|
|
|
|
|
Employee
Benefits
(2)
|
|
$
|
23,054
|
|
$
|
0
|
|
|
|
Total
Termination Benefits:
|
|
$
|
1,121,319
|
|
$
|
370,004
|
|
|
|
Robert S. Clark
|
|
Cash
Severance Payments
|
|
$
|
900,000
|
|
$
|
0
|
|
|
|
Vesting Acceleration
(1)
|
|
$
|
265,756
|
|
$
|
0
|
|
|
|
Continued Coverage
of
|
|
|
|
|
|
|
|
|
|
Employee
Benefits
(2)
|
|
$
|
13,045
|
|
$
|
0
|
|
|
|
Total
Termination Benefits:
|
|
$
|
1,178,801
|
|
$
|
0
|
|
|
|
Geoffrey G. Stedman
|
|
Cash Severance Payments
|
|
$
|
663,750
|
|
$
|
0
|
|
|
|
Vesting Acceleration
(1)
|
|
$
|
168,970
|
|
$
|
0
|
|
|
|
Continued Coverage
of
|
|
|
|
|
|
|
|
|
|
Employee
Benefits
(2)
|
|
$
|
14,722
|
|
$
|
0
|
|
|
|
Total
Termination Benefits:
|
|
$
|
847,442
|
|
$
|
0
|
|
|
|
Linda
M. Breard
|
|
Cash
Severance Payments
|
|
$
|
559,500
|
|
$
|
0
|
|
|
|
Vesting Acceleration
(1)
|
|
$
|
199,591
|
|
$
|
0
|
|
|
|
Continued Coverage
of
|
|
|
|
|
|
|
|
|
|
Employee
Benefits
(2)
|
|
$
|
23,232
|
|
$
|
0
|
|
|
|
Total
Termination Benefits
(3)
:
|
|
$
|
782,323
|
|
$
|
0
|
|
(1)
|
Reflects the
aggregate market value of outstanding and unvested stock option grants and
restricted stock unit awards. For unvested stock options, the aggregate
market value is computed by multiplying (i) the difference between $0.61
and the exercise price of the option, by (ii) the number of shares of the
Company’s Common Stock underlying the unvested stock options at March 31,
2016. For unvested restricted stock unit awards, the aggregate market
value is computed by multiplying (i) $0.61, by (ii) the number of unvested
restricted stock unit awards outstanding at March 31, 2016. In the event
of vesting acceleration or other modifications of share-based awards, we
account for such modifications in accordance with ASC
718.
|
24
Table of Contents
|
(2)
|
Assumes continued
coverage of employee benefits at the Fiscal 2016 COBRA premium rate for
health, dental, and vision coverage.
|
|
|
|
(3)
|
Ms. Breard
voluntarily terminated employment effective January 26, 2016, and while
the total termination benefits reflect the potential payments she would
have received as an employee during a change of control, Ms. Breard did
not receive any actual severance payments in association with her
resignation.
|
DIRECTOR COMPENSATION
The Leadership and
Compensation Committee, together with the full Board, are responsible for
determining the amount and form of compensation for the Company’s non-employee
directors. The Company’s management team provides information, analysis and
recommendations to the Leadership and Compensation Committee on matters such as
competitive market practices, target compensation levels and non-employee
director compensation program design. In addition, the Leadership and
Compensation Committee’s compensation consultant, as identified in the
Compensation Discussion & Analysis, also provides analysis and advice on the
market competitiveness of our non-employee directors’ compensation program (both
in relation to the Company’s peer group and to the broader technology industry),
as well as on current trends and developments, and specific non-employee
director compensation program design recommendations. While the Leadership and
Compensation Committee carefully considers all of the information and
recommendations made by members of management and its compensation consultant,
ultimate authority for all decisions relating to the non-employee director
compensation program rests with the Board.
The Leadership and
Compensation Committee has determined that it will conduct a comprehensive
review of the compensation program for the Company’s non-employee directors
every two years. As the last comprehensive review of the non-employee director
compensation occurred in fiscal year 2014, the management team and the
consultant conducted a comprehensive review of the Fiscal 2016 compensation
programs in fiscal year 2016 and concluded that the total compensation delivered
to non-employee directors is competitive in comparison to the Company’s
compensation peer group (discussed in the Compensation Discussion and Analysis
above). As a result of this review, the management team and the consultant
recommended to the Leadership and Compensation Committee that they do not
approve changes to either the type or the amount of compensation for the Board
is needed at this time, except for an increase to the Chairman annual retainer
of $5,000, from $25,000 to $30,000 per year. Mr. Auvil, however, later declined
to accept this increase, so that the annual Chairman retainer remains at
$25,000. The table below details the specific elements of the Company’s Fiscal
2016 compensation program for its non-employee directors. All cash compensation
is paid in equal quarterly installments.
|
Compensation Element
|
|
Quantum Board Compensation Program
|
|
Board Service – Cash
|
|
➢
Annual cash retainer:
$50,000
|
|
|
|
➢
Meeting fees: none
|
|
Board Service – Equity
|
|
➢
Initial award: restricted stock units with grant date value
of $125,000
|
|
|
|
●
Vest over two years (50% after one year and
50% over the second year)
|
|
|
|
➢
Annual award: restricted stock units with grant date value of
$100,000
|
|
|
|
●
Vest quarterly over one
year
|
|
Committee Chair Service
|
|
➢
Annual cash retainers:
|
|
|
|
●
Audit Committee: $25,000
|
|
|
|
●
Leadership & Compensation Committee:
$17,500
|
|
|
|
●
Corporate Governance & Nominating
Committee: $15,000
|
|
|
|
➢
Meeting fees: none
|
|
Committee Member Service
|
|
➢
Annual cash retainers:
|
|
|
|
●
Audit Committee: $12,500
|
|
|
|
●
Leadership & Compensation Committee:
$10,000
|
|
|
|
●
Corporate Governance & Nominating
Committee: $7,500
|
|
|
|
➢
Meeting fees: none
|
|
Lead
Director / Chairman
|
|
➢
Annual cash retainer:
$25,000
|
During Fiscal 2016, the
non-employee directors received the following equity awards: Messrs. Auvil,
Black, DiNardo, Fuller, Krall, Powers, and Roberson each received 90,090
restricted stock units and Mr. Anderson received 22,523 restricted stock units
that vest as follows: 25% vest on each of December 1, 2015, March 1, 2016, June
1, 2016, and the date of the Annual Meeting. Mr. Andersen, who joined the Board
on May 6, 2015, received 64,767 restricted stock units that will vest as
follows: 50% will vest on June 1, 2016 and 50% will vest on June 1, 2017. Due to
Mr. Black’s resignation from the Board in February 2016, any unvested restricted
stock units were forfeited.
25
Table of Contents
The Board, in its
discretion, determines the time or times at which equity awards may be granted,
the form in which such awards are granted, the number of shares of the Company’s
stock subject to each award and, in the case of stock options, the period over
which such stock options become exercisable.
We also maintain a
non-qualified deferred compensation plan which allows our non-employee directors
to contribute some or all of their cash fees to an irrevocable trust for the
purpose of deferring federal and state income taxes. Participants direct the
deemed investment of their deferred accounts among a pre-selected group of
investment funds, which does not include shares of the Company’s Common Stock.
The deemed investment accounts mirror the investment options available under the
Company’s 401(k) Savings Plan. Participants’ deferred accounts are credited with
interest based on their deemed investment selections. During Fiscal 2016, none
of our non-employee directors elected to defer any of their cash fees to the
non-qualified deferred compensation plan.
Effective October 2015, in
connection with his service on the Company’s Board, Mr. Auvil declined to
receive any further cash fees and this forgone compensation will not be made up
to Mr. Auvil in any other form.
Employee directors receive
no additional compensation for their service on the Board or on committees of
the Board.
Compensation paid to the
non-employee directors during Fiscal 2016 is set forth in the following table.
Mr. Press joined the Board in fiscal year 2017 and therefore, did not receive
compensation during Fiscal 2016.
Fiscal 2016 Director
Compensation Table
(1)
|
Name
|
Fees Earned
or Paid
in
Cash
(1)
|
|
Stock
Awards
(2)(4)
|
|
Option
Awards
(3)(4)
|
|
Non Equity
Incentive
Plan
Compensation
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
|
|
All
Other
Compensation
|
|
Total
|
|
Andersen, Robert J.*
|
$
|
50,000
|
|
$
|
150,000
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
200,000
|
|
Auvil III, Paul R.**
|
$
|
47,500
|
|
$
|
100,000
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
147,500
|
|
Black, Philip***
|
$
|
61,250
|
|
$
|
100,000
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
161,250
|
|
DiNardo, Louis
|
$
|
61,250
|
|
$
|
100,000
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
161,250
|
|
Fuller, Dale L.
|
$
|
57,500
|
|
$
|
100,000
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
157,500
|
|
Krall, David A.
|
$
|
67,500
|
|
$
|
100,000
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
167,500
|
|
Powers, Gregg J.
|
$
|
61,250
|
|
$
|
100,000
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
161,250
|
|
Roberson, David E.
|
$
|
85,000
|
|
$
|
100,000
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
185,000
|
|
Smith, Jeffrey C.***
|
$
|
15,000
|
|
$
|
100,000
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
115,000
|
|
*
|
|
|
Mr. Andersen joined the Board effective May
6, 2015.
|
|
|
|
**
|
|
|
Effective October 2015, Mr. Auvil declined
to receive any further cash fees in connection with his service on the
Company’s Board.
|
|
|
|
***
|
|
|
Mr. Smith resigned effective May 6, 2015,
and Mr. Black resigned effective February 3, 2016.
|
26
Table of Contents
|
|
(1)
|
|
Amounts reflect
compensation earned by each director during Fiscal 2016. Fees Earned or
Paid in Cash include the following:
|
|
Name
|
|
Board
Retainer
|
|
Committee
Membership
Retainer
|
|
Committee
Chair
Retainer
|
|
Chairman
Retainer
|
|
Total Fees
Earned
or
Paid in Cash
|
|
Andersen, Robert J.
|
|
$
|
43,750
|
|
$
|
6,250
|
|
$
|
—
|
|
|
|
|
$
|
50,000
|
|
Auvil III, Paul R.
|
|
$
|
25,000
|
|
$
|
10,000
|
|
$
|
—
|
|
$
|
12,500
|
|
$
|
47,500
|
|
Black, Philip
|
|
$
|
50,000
|
|
$
|
11,250
|
|
$
|
—
|
|
$
|
—
|
|
$
|
61,250
|
|
DiNardo, Louis
|
|
$
|
50,000
|
|
$
|
7,500
|
|
$
|
3,750
|
|
$
|
—
|
|
$
|
61,250
|
|
Fuller, Dale L.
|
|
$
|
50,000
|
|
$
|
7,500
|
|
$
|
—
|
|
$
|
—
|
|
$
|
57,500
|
|
Krall, David A.
|
|
$
|
50,000
|
|
$
|
10,000
|
|
$
|
7,500
|
|
$
|
—
|
|
$
|
67,500
|
|
Powers, Gregg J.
|
|
$
|
50,000
|
|
$
|
7,500
|
|
$
|
3,750
|
|
$
|
—
|
|
$
|
61,250
|
|
Roberson, David E.
|
|
$
|
50,000
|
|
$
|
22,500
|
|
$
|
12,500
|
|
$
|
—
|
|
$
|
85,000
|
|
Smith, Jeffrey C.
|
|
$
|
12,500
|
|
$
|
2,500
|
|
$
|
—
|
|
$
|
—
|
|
$
|
15,000
|
|
|
(2)
|
|
On June 1, 2015, Mr.
Andersen received 64,767 restricted stock units. On September 1, 2015, the
Company’s non-employee directors received the following awards: Messrs.
Auvil, Black, DiNardo, Fuller, Krall, Powers, and Roberson each received
an annual award of 90,090 restricted stock units and Mr. Andersen received
22,523 restricted stock units. The value of these awards was computed in
accordance with Statement of Financial Accounting Standards Accounting
Standards Codification Topic 718, Compensation – Stock Compensation (“ASC
718”). Assumptions used in the calculation of the value are disclosed
under “Stock Incentive Plans and Share-Based Compensation” in the
Company’s Annual Report on Form 10-K filed with the SEC on June 6,
2016.
|
|
|
|
|
|
(3)
|
|
No stock options were
granted to the non-employee directors in Fiscal 2016.
|
|
|
|
|
|
(4)
|
|
Outstanding equity
awards held by each of the non-employee directors as of March 31, 2016
were as follows:
|
|
|
|
|
|
|
Total
Equity
|
|
|
Awards
|
|
Options
|
|
Awards
|
|
Name
|
Outstanding
|
|
Outstanding
|
|
Outstanding
|
|
Andersen, Robert J.
|
76,028
|
|
—
|
|
76,028
|
|
Auvil III, Paul R.
|
45,044
|
|
66,000
|
|
111,044
|
|
Black, Philip
|
—
|
|
—
|
|
—
|
|
DiNardo, Louis
|
45,044
|
|
—
|
|
45,044
|
|
Fuller, Dale L.
|
72,698
|
|
—
|
|
72,698
|
|
Krall, David A.
|
45,044
|
|
—
|
|
45,044
|
|
Powers, Gregg J.
|
45,044
|
|
—
|
|
45,044
|
|
Roberson, David E.
|
45,044
|
|
—
|
|
45,044
|
|
Smith, Jeffrey C.
|
—
|
|
—
|
|
—
|
Leadership and
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
The members of the
Company’s Leadership and Compensation Committee are Mr. David A. Krall, Chair of
the committee, and Mr. David E. Roberson. No member of the Leadership and
Compensation Committee is currently, nor has any been at any time since the
formation of the Company, an officer or employee of the Company or any of its
subsidiaries. Likewise, no member of the Leadership and Compensation Committee
has entered into a transaction, or series of similar transactions, in which they
will have a direct or indirect material interest adverse to the Company. No
interlocking relationships exist between any member of the Board or Leadership
and Compensation Committee and any member of the board of directors or
compensation committee of any other company, nor has any such interlocking
relationship existed in the past.
27
Table of Contents