UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934 (Amendment
No. )
Filed by the
Registrant
þ
Filed by a Party other than the
Registrant
o
Check the appropriate box:
o
Preliminary
Proxy Statement
o
Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ
Definitive
Proxy Statement
o
Definitive
Additional Materials
o
Soliciting
Material Pursuant to
Section 240.14a-12
HARRIS INTERACTIVE INC.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ
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No fee required.
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o
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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161 Sixth Avenue
New York, New York 10013
Dear Stockholder:
You are cordially invited to attend the 2011 Annual Meeting of
Stockholders of Harris Interactive Inc., which will be held on
Tuesday, November 1, 2011, at 161 Sixth Avenue (at Spring
Street), Sixth Floor, New York, New York at 5:30 p.m.
(local time).
At the Annual Meeting you will be asked to elect one director to
our Board of Directors, ratify the selection of our independent
registered public accounting firm, and approve an amendment to
our 2007 Employee Stock Purchase Plan to increase the number of
shares of common stock reserved for issuance under that plan by
500,000 shares.
On the following pages, you will find the formal Notice of
Annual Meeting and our Proxy Statement. Included with our Proxy
Statement is a copy of our Annual Report on
Form 10-K
for our fiscal year ended June 30, 2011. We encourage you
to read the Proxy Statement as well as our
Form 10-K.
These documents will provide you with information about our
management, operations, markets, and services, as well as our
audited financial statements.
Whether or not you plan to attend the Annual Meeting, please
register your vote as soon as possible to ensure that your
shares of Harris Interactive common stock will be represented at
the Annual Meeting. We encourage you to take advantage of the
option to vote by telephone or the Internet. If you prefer, you
may complete, sign, date and return the accompanying proxy card
in the enclosed postage paid envelope.
We hope that many of you will be able to attend the Annual
Meeting in person. We look forward to seeing you there.
Sincerely,
Al Angrisani
Interim Chief Executive Officer
Howard L. Shecter
Chairman
Notice of Annual
Meeting of Stockholders to Be Held November 1,
2011
To Our Stockholders:
You are cordially invited to attend the 2011 Annual Meeting of
Stockholders of Harris Interactive Inc., which will be held at
161 Sixth Avenue (at Spring Street), Sixth Floor, New York, New
York at 5:30 p.m. (local time), for the following purposes:
1. To elect one (1) Class III director to the
Board of Directors to hold office for a three year term or until
his successor is duly appointed and qualified;
2. To ratify the selection of PricewaterhouseCoopers LLP as
our independent registered public accounting firm for fiscal
2012;
3. To approve an amendment to our 2007 Employee Stock
Purchase Plan to increase the number of shares of common stock
reserved for issuance under that plan by
500,000 shares; and
4. To act upon such other business as may properly come
before the meeting or any adjournment thereof.
A copy of our Annual Report on
Form 10-K
for our fiscal year ended June 30, 2011 is enclosed with
this Notice of Annual Meeting and attached Proxy Statement. For
ten days prior to the meeting, a complete list of the
stockholders entitled to vote at the Annual Meeting will be
available for examination by any stockholder of record for any
purpose germane to the Annual Meeting during ordinary business
hours at our offices at 161 Sixth Avenue, New York, New
York 10013. The list also will be available at the Annual
Meeting.
By Order of the Board of Directors,
Marc H. Levin
Executive Vice President, Chief Administrative Officer,
General Counsel and Corporate Secretary
September 30, 2011
New York, New York
IMPORTANT: To assure that your shares are represented at the
Annual Meeting, you must complete your proxy as soon as
possible. You may vote your shares by telephone at
1-800-690-6903
or via the Internet at www.proxyvote.com by following the
enclosed instruction form. If you prefer, you may fill in, date,
sign and promptly mail the enclosed proxy card in the
accompanying postage paid envelope. If you attend the Annual
Meeting, you may choose to vote in person even if you have
previously sent in your proxy card.
Stockholders should read the entire Proxy Statement carefully
prior to returning their proxies.
TABLE OF
CONTENTS
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i
161 Sixth Avenue
New York, New York 10013
PROXY
STATEMENT
September 30, 2011
FOR ANNUAL
MEETING OF STOCKHOLDERS OF HARRIS INTERACTIVE INC.
To Be Held November 1, 2011
The accompanying proxy is solicited by the Board of Directors
(the Board) of Harris Interactive Inc. (Harris
Interactive, the Company, we or
us) for use at the 2011 Annual Meeting of
Stockholders (the 2011 Annual Meeting) to be held on
Tuesday, November 1, 2011, at 5:30 p.m. (local time)
or any adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting. The 2011 Annual Meeting
will be held at 161 Sixth Avenue (at Spring Street), Sixth
Floor, New York, New York. The date of this Proxy Statement is
September 30, 2011. The approximate date on which this
Proxy Statement and the accompanying form of proxy were first
sent or given to stockholders is October 4, 2011.
GENERAL
INFORMATION
Record Date;
Voting Securities
Only stockholders of record at the close of business on
September 6, 2011 are entitled to vote their shares of
Harris Interactive common stock at the 2011 Annual Meeting and
any adjournment thereof. As of September 6, 2011, there
were 55,651,735 shares of Harris Interactive common stock
issued and outstanding. Each holder of shares of common stock is
entitled to one vote for each share of common stock held.
Stockholders may vote in person or by proxy.
Voting Your
Proxy
To ensure that your vote is recorded promptly, please vote as
soon as possible, even if you intend to attend the 2011 Annual
Meeting in person. You may grant a proxy to vote your shares via
the Internet, telephone, or mail as more fully described below:
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By the Internet:
Go to
www.proxyvote.com
as described in the instructions
accompanying this Proxy Statement. You will need your proxy card
or electronic delivery notice to cast your vote.
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By Telephone:
Call
1-800-690-6903
and follow the voice prompts. You will need your proxy card or
electronic delivery notice to cast your vote.
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By Mail:
Mark your vote, sign your name
exactly as it appears on your proxy card, date your card, and
return it in the envelope provided to Harris Interactive Inc.,
c/o Broadridge
Financial Solutions, 51 Mercedes Way, Edgewood, NY 11717.
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1
If you properly submit a proxy without giving specific voting
instructions, your shares will be voted in accordance with the
recommendations of the Board FOR:
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the nominee for Class III director;
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ratification of the selection of PricewaterhouseCoopers LLP as
the Companys independent registered public accounting firm
for fiscal 2012; and
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an amendment to the Companys 2007 Employee Stock Purchase
Plan to increase the number of shares of Harris Interactive
common stock reserved for issuance under that plan by
500,000 shares.
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If any other business properly comes before the stockholders for
a vote at the 2011 Annual Meeting, your shares will be voted by
the proxy holders in accordance with the recommendation of the
Board, or, in the absence of any such recommendation, in
accordance with their best judgment. Such persons also have
discretionary authority to vote to adjourn the 2011 Annual
Meeting.
Revoking Your
Proxy
You may revoke your proxy at any time before it is exercised by:
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sending a written notice of revocation to Harris Interactive
Inc., Attention: Corporate Secretary, 161 Sixth Avenue, New
York, New York 10013;
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submitting a later dated proxy by mail, telephone, or the
Internet; or
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voting in person at the 2011 Annual Meeting.
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Quorum
A majority of the shares of Harris Interactive common stock
entitled to vote must be present either in person or by proxy at
the 2011 Annual Meeting before any business may be conducted.
Tabulation of
Abstentions and Broker Non-Votes
Abstentions and broker non-votes will be included in the number
of shares present for purposes of determining whether a quorum
is present at the 2011 Annual Meeting. Abstentions also will be
counted as shares present and entitled to
vote. A broker non-vote occurs when a broker has not
received voting instructions from the beneficial owner of the
shares and the broker does not have the authority to vote the
shares because the proposal is non-routine. Broker non-votes are
not counted as shares entitled to vote with respect
to proposals over which they do not have discretionary
authority. Therefore, while broker non-votes are considered
present for purposes of determining whether there is
a quorum, they are not considered present for
purposes of determining the majority of shares at the meeting
and entitled to vote on a particular action.
Shares Held
in Street Name
If your shares are held in a brokerage account or by another
nominee, you are considered the beneficial owner of
those shares. As the beneficial owner, you have the right to
direct your broker or nominee how to vote your shares, and your
broker or nominee is required to vote your shares in accordance
with your instructions. If you do not give instructions to your
broker or nominee, then your broker or nominee will be entitled
to vote your shares in its discretion as to the election of a
Class III director (Proposal 1), ratification of the
selection of our independent registered public accounting firm
(Proposal 2), and an amendment to the Companys 2007
Employee Stock Purchase Plan to increase the number of shares of
Harris Interactive common stock reserved for issuance under that
plan by 500,000 shares (Proposal 3).
As the beneficial owner of shares, you are invited to attend the
2011 Annual Meeting. Please note, however, that if you are a
beneficial owner, you may not vote your shares in person at the
2011 Annual Meeting unless you obtain a legal proxy
from your broker or nominee that holds your shares.
2
Electronic
Delivery
We can reduce our expenses if you elect to receive your annual
reports and proxy materials via the Internet. If you request,
you can receive email notifications when these documents are
available electronically on the Internet. You may sign up for
this service at www.proxyvote.com.
Copies of our Annual Report on
Form 10-K
for our fiscal year ended June 30, 2011 and the proxy
materials can be accessed via the Internet at
https://materials.proxyvote.com/414549.
Householding
Unless we have received contrary instructions, we send a single
copy of the annual report, proxy statement, notice of annual or
special meeting, and notice of Internet availability of proxy
materials to any household at which two or more stockholders
reside if we believe the stockholders are members of the same
family. Each stockholder in the household will continue to
receive a separate proxy card. This process, known as
householding, reduces the volume of duplicate
information received at your household and helps us reduce our
expense. We will deliver promptly, upon written or oral request,
a separate copy of the annual report, proxy statement, notice of
annual or special meeting,
and/or
notice of Internet availability of proxy materials to any
stockholder sharing an address to which a single copy of the
documents was delivered. You may request such separate copies,
or request that separate copies of the annual report, proxy
statement, notice of annual or special meeting,
and/or
notice of Internet availability of proxy materials be delivered
in the future, by (i) sending written notice to: Harris
Interactive Inc., Attention: Corporate Secretary, 161 Sixth
Avenue, New York, New York 10013, (ii) sending written
notice to Broadridge Financial Solutions, Householding
Department, 51 Mercedes Way, Edgewood, New York 11717, or
(iii) calling
(800) 542-1061.
Stockholders sharing an address can request delivery of a single
copy of the annual report, proxy statement, notice of annual or
special meeting,
and/or
notice of Internet availability of proxy materials if they are
receiving multiple copies by notice to the same address or
calling the same telephone number.
Solicitation of
Proxies
We will bear all costs of this proxy solicitation. In addition
to soliciting stockholders by mail, we will request banks and
brokers, other custodians, nominees, and fiduciaries to solicit
their customers who have shares of Harris Interactive common
stock registered in their names and will reimburse them for
their reasonable,
out-of-pocket
costs. We may use the services of our officers, directors, and
regular employees to solicit proxies, personally or by
telephone, facsimile or electronic mail, without additional
compensation.
3
STOCK OWNERSHIP
AND REPORTING
Certain
Beneficial Owners
The following table sets forth information regarding the
beneficial ownership of Harris Interactive common stock as of
September 6, 2011 by each person who, or entity that, is
known by the Company to own beneficially more than 5% of the
outstanding shares of the Companys common stock. This
table is based on information provided to us or filed with the
Securities and Exchange Commission (SEC) by our
principal stockholders.
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Amount and
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Nature of
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Percent of Common
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Beneficial
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Stock Beneficially
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Name and Address
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Ownership
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Owned(1)
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Vincent Bolloré
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8,036,025
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14.4
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%
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Through Financière de Sainte-Marine
31/32 quai de Dion Bouton
92800 Puteaux, France
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Steven L. Fingerhood(2)
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5,420,953
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9.7
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%
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Technology Opportunity Partners, L.P.
ZF Special Opportunities Fund, L.L.C.
Technology Opportunity Ventures L.L.C.
SLF Partners, LLC
SLF Industry, L.P.
SLF Management, LLC
One Ferry Building, Suite 255
San Francisco, CA 94111
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Mill Road Capital, L.P.
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4,373,855
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7.9
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%
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Thomas E. Lynch
Charles M.B. Goldman
Scott P. Scharfman
Mill Road Capital GP LLC
Two Sound View Drive, Suite 300
Greenwich, CT 06830
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Gruber & McBaine Capital Management, LLC
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3,522,049
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6.3
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%
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50 Osgood Place Penthouse
San Francisco, CA 94133
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Royce & Associates, LLC
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3,424,389
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6.2
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%
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745 Fifth Avenue
New York, NY 10151
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Dimensional Fund Advisors LP
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3,217,393
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5.8
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%
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Palisades West, Building One, 6300 Bee Cave Road
Austin, TX 78746
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Paradigm Capital Management, Inc.
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3,061,265
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5.5
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%
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9 Elk Street
Albany, NY 12207
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(1)
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The percentage of shares beneficially owned is based on
55,651,735 shares of Harris Interactive common stock
outstanding as of September 6, 2011. Beneficial ownership
is determined in accordance with rules of the SEC and generally
includes voting or investment power with respect to securities.
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(2)
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See footnote 5 to the table below under Stock Ownership
and Reporting Directors and Executive Officers.
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Directors and
Executive Officers
The following table sets forth information regarding the
beneficial ownership of Harris Interactive common stock as of
September 6, 2011 by (i) each director and
director-nominee, (ii) the Chief Executive Officer, Chief
Financial Officer, and each other executive officer named in the
Summary Compensation Table below, and (iii) all
directors and executive officers as a group. All shares are
subject to the named persons sole voting and investment
power except where otherwise indicated. This table is based on
information provided to us or filed with the SEC by our
directors, director-nominees, and executive officers.
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Common Shares
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Total
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Percent of
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Number of
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Issuable Upon
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Common Shares
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Common Stock
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Common
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Exercise of
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Beneficially
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Beneficially
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Name of Beneficial Owner
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Shares
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Options(1)
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Owned(1)(2)
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Owned(1)(3)
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Mr. Al Angrisani
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500,000
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28,450
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528,450
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*
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Ms. Kimberly Till
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18,997
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18,997
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*
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Mr. Eric W. Narowski
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77,768
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45,792
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123,560
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*
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Mr. Pavan Bhalla
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67,500
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67,500
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*
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Mr. Michael de Vere
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27,084
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27,084
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*
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Mr. Marc H. Levin
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47,604
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47,604
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*
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Mr. Enzo J. Micali
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*
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Mr. Robert Salvoni
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*
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Mr. Marty Beard(4)
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15,774
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15,774
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*
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Mr. David Brodsky(4)
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271,629
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30,000
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301,629
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*
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Mr. Steven L. Fingerhood(4)(5)
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5,420,953
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5,420,953
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9.7
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%
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Mr. Alan Gould(4)
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10,208
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10,208
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*
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Mr. James R. Riedman(4)(6)
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237,842
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78,333
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316,175
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*
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Mr. Howard L. Shecter(4)
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330,234
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40,000
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370,234
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*
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Mr. Antoine G. Treuille(4)
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95,884
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30,000
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125,884
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*
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All directors and current executive officers as a group
(11 persons)(7)
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6,460,292
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298,813
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6,759,105
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12.1
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%
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*
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Less than 1%
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(1)
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Reflects common stock that may be purchased upon the exercise of
stock options that were exercisable as of September 6, 2011
or that will become exercisable on or before November 5,
2011. Such shares are deemed to be outstanding and beneficially
owned only for the purpose of computing the percentage ownership
of the specific individual and not for the purpose of computing
the percentage ownership of any other person.
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(2)
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No shares held by any of the persons shown are pledged as
security.
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(3)
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The percentage of shares outstanding is based on
55,651,735 shares of Harris Interactive common stock
outstanding as of September 6, 2011, except as noted in
footnote (1) above. Beneficial ownership is determined in
accordance with rules of the SEC and generally includes voting
or investment power with respect to securities.
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(4)
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Director.
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(5)
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Mr. Fingerhood has indirect beneficial ownership of
5,385,953 shares of the reported common stock by virtue of
his position as the managing member of the general partner of
certain private investment vehicles and, as such, the common
stock may be deemed to be beneficially owned by
Mr. Fingerhood. Mr. Fingerhood disclaims beneficial
ownership of the common stock except to the extent of his
pecuniary interest therein. Mr. Fingerhood has direct
beneficial ownership of the balance of the reported common stock
Mr. Fingerhood has sole voting power and sole investment
power over all of the reported common stock.
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(6)
|
|
Includes 129,558 shares of common stock held by Riedman
Corporation, of which Mr. Riedman is the former President
and is currently a director and stockholder.
|
|
(7)
|
|
Includes executive officers of Harris Interactive who are not
identified in the table above.
|
5
Equity
Compensation Plan Table
The following table provides information as of June 30,
2011 with respect to shares of common stock that may be issued
under the terms of the Companys equity compensation plans,
including the Companys 2007 Long-Term Incentive Plan (the
Incentive Plan) and the Companys 2007 Employee
Stock Purchase Plan, as amended (the ESPP):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plan Information
|
|
|
|
Fiscal Year Ended June 30, 2011
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
|
|
|
|
|
|
Future Issuance Under
|
|
|
|
Number of Shares to be
|
|
|
Weighted-Average
|
|
|
Equity Compensation Plans
|
|
|
|
Issued Upon Exercise of
|
|
|
Exercise Price of
|
|
|
(Excluding Securities
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Reflected in Column
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
(a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)(1)
|
|
|
Equity compensation plans approved by stockholders(2)
|
|
|
6,246,381
|
|
|
$
|
1.39
|
|
|
|
2,357,521
|
|
Equity compensation plans not approved by stockholders(3)
|
|
|
150,000
|
|
|
$
|
7.36
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,396,381
|
|
|
$
|
1.53
|
|
|
|
2,357,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Not only options but also awards of stock and units for stock
may be granted under the Incentive Plan, and any or all of the
shares available under the Incentive Plan may be used for that
purpose.
|
|
(2)
|
|
The options were issued at fair market value on the date of
issuance. In general, with respect to employee stock options,
25% of each respective grant vests one year after the date of
issuance and
1/36th
of
the remainder of each grant vests each month thereafter. In
general, with respect to director stock options, 1/36th of each
respective grant made after July 1, 2005 vests each month
after the date of issuance, and 25% of each respective grant
made on or prior to July 1, 2005 vested one year after the
date of issuance and 1/36th of the remainder of each grant
vested each month thereafter. Also included are options granted
to Messrs. Angrisani, Narowski, de Vere and Levin, which
are subject to performance-based vesting requirements as more
fully described below under Compensation of Directors and
Executive Officers Outstanding Equity Awards at 2011
Fiscal Year End. All vesting of options ceases upon
termination of an individuals employment or service as a
director, except, in limited cases, upon the death or disability
of the individual, as more fully described below under
Compensation of Directors and Executive
Officers Grants of Plan Based Awards in Fiscal
2011 and Outstanding Equity Awards at
2011 Fiscal Year End. Further, options may vest under
varying circumstances upon a change in control of the Company
during the term of the holders employment or service as a
director, as more particularly described below under
Compensation Discussion and Analysis
Implementing the Compensation Committees
Objectives Equity Incentive Compensation
Aligning Compensation with Stockholder Value. Generally,
the options are not transferable.
|
|
(3)
|
|
Represents 150,000 options issued in fiscal 2004 and 2005 to
certain employees hired in connection with the acquisition of
Novatris, S.A. The options granted to former employees of
Novatris, S.A. during fiscal 2004 have an exercise price of
$8.55. The options granted to former employees of Novatris, S.A.
during fiscal 2005 have an exercise price of $4.98. The options
granted in fiscal 2004 and 2005 were for a ten year term;
provided, however, they must be exercised on or before the date
of termination of employment of the respective holders. The
options fully vest upon the holders death or disability.
The shares issuable upon exercise of these options were
registered by the Company on
Form S-8
filed with the SEC on March 8, 2004.
|
6
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the Securities Exchange Act), and related
SEC regulations, require the Companys directors and
executive officers, and persons who own more than 10% of a
registered class of the Companys equity securities, to
file reports of ownership and changes in ownership of those
securities with the SEC, and to furnish the Company with copies
of all Section 16(a) reports they file.
Based solely on our review of the copies of these reports
received by us and representations from certain reporting
persons that they have complied with the relevant filing
requirements, we believe that all such filing requirements were
complied with during the fiscal year ended June 30, 2011,
except for late filings of Form 4s related to
performance-based stock options granted on June 7, 2011 to
Messrs. Angrisani, Narowski, de Vere and Levin.
CORPORATE
GOVERNANCE
Directors and
Committee Membership
The current members of the Board and each of its standing
Committees are set forth in the following table. The standing
Committees of the Board include an Audit Committee, a
Compensation Committee, and a Nominating and Governance
Committee.
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|
|
|
|
|
|
|
|
|
|
|
Nominating
|
|
|
|
|
|
|
|
|
and
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|
|
|
|
Audit
|
|
Compensation
|
|
Governance
|
|
|
Director
|
|
Committee
|
|
Committee
|
|
Committee
|
|
Independent(1)
|
|
Marty Beard(3)
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|
|
M
|
|
|
|
M
|
|
|
|
M
|
|
|
|
X
|
|
David Brodsky(3)
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|
|
C
|
|
|
|
M
|
|
|
|
M
|
|
|
|
X
|
|
Steven L. Fingerhood(3)(4)
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|
|
M
|
|
|
|
M
|
|
|
|
M
|
|
|
|
X
|
|
Alan Gould
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|
|
|
|
|
|
|
|
|
|
M
|
|
|
|
X
|
|
James R. Riedman(3)(5)
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|
|
M
|
|
|
|
C
|
|
|
|
M
|
|
|
|
X
|
|
Howard L. Shecter(2)(3)
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|
|
M
|
|
|
|
M
|
|
|
|
C
|
|
|
|
X
|
|
Antoine G. Treuille(3)
|
|
|
M
|
|
|
|
M
|
|
|
|
M
|
|
|
|
X
|
|
Number of meetings held
|
|
|
5
|
|
|
|
9
|
|
|
|
6
|
|
|
|
5
|
|
|
|
|
C
|
|
Signifies Committee Chairman
|
|
M
|
|
Signifies Committee member
|
|
X
|
|
Signifies an independent director as described in Director
Independence below
|
|
|
|
(1)
|
|
See Director Independence below for applicable
definitions
|
|
(2)
|
|
Board Chairman
|
|
(3)
|
|
The Board has determined that each of the members of the Audit
Committee is an audit committee financial expert as
defined in Item 407(d)(5) of
Regulation S-K
promulgated by the SEC
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|
(4)
|
|
Lead Director
|
|
(5)
|
|
Not standing for re-election in 2011
|
Director
Independence
The Board has adopted Corporate Governance Guidelines (the
Governance Guidelines), which are posted at the
Investor Relations Corporate
Governance Corporate Governance
Guidelines section of the Companys website located
at
www.harrisinteractive.com
. The Governance Guidelines
require that independent directors constitute a substantial
majority of the Board, and that all members of the Audit,
Compensation, and Nominating and Governance Committees be
independent. The Governance Guidelines provide that a director
is independent when the director is free from any relationship
that
7
would interfere with his or her exercise of independent business
judgment, and who is independent under the standards
for independence of the Nasdaq Stock Exchange and applicable law.
The Nominating and Governance Committee, based upon its review
of responses to questionnaires inquiring about transactions,
relationships and arrangements of directors and family members
with the Company, recommended to the Board, and the Board
determined, that all of the directors currently serving are
independent under the Governance Guidelines and as defined under
Nasdaq Rule 5605(a)(2). Directors found to be independent
are designated as such in the Directors and Committee
Membership table above.
All members of the Audit, Compensation, and Nominating and
Governance Committees are among the directors found by the Board
to be independent. In addition, the requirements for
independence contained in Nasdaq Rule 5605(c)(2) require
that members of the Audit Committee meet the criteria for
independence set forth in
Rule 10A-3(b)(1)
promulgated by the SEC. The Board has determined that all
members of the Audit Committee meet these criteria. The Board
also has found that all members of the Compensation Committee
fall within the outside director standard for
purposes of Rule 162(m) of the Internal Revenue Code of
1986, as amended (the IRC).
The nominee for election at the 2011 Annual Meeting is
independent.
Board and
Committee Meetings
The Board held a total of fourteen meetings during the fiscal
year ended June 30, 2011, and took three actions by written
consent. The independent directors, identified above, met
separately in executive session in accordance with Nasdaq
Rule 5605(b)(2) five times during fiscal 2011. The number
of meetings held by each Committee is identified in the
Directors and Committee Membership table above.
During the fiscal year ended June 30, 2011 all directors
attended at least 75% of the aggregate of: (i) the total
number of meetings of the Board (held during the periods for
which they respectively served as a director) and (ii) the
total number of meetings held by all Committees of the Board on
which they served (held during the periods that they
respectively served).
Director
Attendance at Annual Meetings
The Board has adopted a policy requiring that directors attend
each annual meeting of stockholders absent compelling
circumstances preventing such attendance. All directors standing
for election or continuing, and then serving, attended the 2010
Annual Meeting of Stockholders.
Committees of the
Board
Audit
Committee
Membership
The current members of the Audit Committee are identified in the
Directors and Committee Membership table above. The
Board has determined that each member of the Audit Committee is
an audit committee financial expert as defined in
Item 407(d)(5) of
Regulation S-K
promulgated by the SEC.
Scope and
Authority
The Audit Committee of the Board (a) monitors the integrity
of the accounting policies, financial reporting, and disclosure
practices of the Company, (b) reviews the results of the
Companys quarterly and annual financial statements and
annual audit and recommends to the Board approval of their
inclusion in the Companys quarterly and annual reports,
(c) appoints and monitors the independence and performance
of the Companys independent registered public accounting
firm, (d) approves the compensation of the independent
registered public accounting firm and approves in advance all
permitted non-audit services to be provided by the
Companys independent registered public accounting firm,
(e) meets with the Companys independent registered
public accounting firm to review the Companys critical
accounting
8
policies, internal controls, and financial management practices,
(f) monitors the processes established and maintained by
management in order for management to assure that an adequate
system of internal accounting and financial control is
functioning within the Company, (g) monitors the processes
established and maintained by management in order for management
to assure corporate compliance with legal and regulatory
requirements, and (h) monitors the processes established
and maintained by management for measuring, managing, and
monitoring areas of enterprise risk designated by the Board.
This Committee also receives, reviews, and takes action with
respect to any complaints received by the Company regarding
accounting, internal accounting controls, and auditing matters.
Audit Committee
Charter
The Audit Committee operates under a written charter adopted by
the Board. A copy of the Companys Audit Committee Charter
is available at the Investor Relations
Corporate Governance Audit
Committee Charter section of the Companys website
located at
www.harrisinteractive.com
. In April 2011, the
Audit Committee conducted a review of its compliance with the
Audit Committee Charter and determined that it has operated in
compliance with the Charters provisions.
Audit
Committees Role in Connection with the Financial
Statements and Controls of the Company
Management of the Company has primary responsibility for the
Companys financial statements and internal control over
financial reporting. The Companys independent registered
public accounting firm has responsibility for the audit of the
Companys financial statements. The responsibility of the
Audit Committee is to oversee financial and control matters,
among its other duties as specified in the Audit Committee
Charter. The Audit Committee is responsible for retention and
approval of compensation of the independent registered public
accounting firm, and pre-approval of the permitted non-audit
services to be provided by such firm. The Audit Committee meets
regularly with the independent registered public accounting
firm, without the presence of management, to ensure candid and
constructive discussions about the Companys compliance
with accounting standards and best practices among public
companies comparable in size and scope to Harris Interactive.
The Audit Committee also reviews with management and the
independent registered public accounting firm material
developments in accounting that may be pertinent to the
Companys financial reporting practices.
Conduct of Audit
Committee Meetings
The Audit Committee met with representatives of
PricewaterhouseCoopers, LLP (PwC), the
Companys independent registered public accounting firm, at
each of its quarterly meetings during the fiscal year ended
June 30, 2011. The Audit Committees agenda for each
meeting was established by its chairperson and the
Companys Chief Financial Officer at the time. The meetings
were designed to facilitate and encourage communication among
members of the Audit Committee and management.
At these meetings, the Audit Committee reviewed and discussed
various financial and regulatory issues, and received a summary
of any complaints received through the Companys anonymous
complaint procedure with respect to internal accounting controls
or auditing matters. The Audit Committee, from time to time,
also reviewed and discussed reports regarding internal audit
matters, reviewed policies and procedures, including among
others the Companys Internal Disclosure Controls
Procedures and the Policy and Procedures with Respect to Related
Party Transactions, and held separate executive sessions with
representatives of PwC, and the Companys Chief Executive
Officer, Chief Financial Officer, and General Counsel. Executive
sessions included candid discussions of financial management,
accounting, internal controls, and legal and compliance issues.
Additionally, the Audit Committees chairperson
periodically held separate discussions with representatives of
PwC, and the Companys Chief Executive Officer, Chief
Financial Officer, and General Counsel.
9
Audit Committee
Review of Periodic Reports
The Audit Committee reviewed each of the Companys
quarterly and annual reports, including the Managements
Discussion and Analysis of Financial Condition and Results of
Operations contained therein, at each of its quarterly meetings
during the fiscal year ended June 30, 2011. As part of this
review, the Audit Committee discussed the reports with the
Companys management and considered the required
communications prepared by the independent registered public
accounting firm about the Companys quarterly and annual
reports. The Audit Committee also considered related matters
such as the quality and appropriateness, not just the
acceptability, of the Companys accounting principles,
alternative methods of accounting under U.S. generally
accepted accounting principles (GAAP), and the
preferences of the independent registered public accounting firm
in this regard, the Companys critical accounting policies,
and the clarity and completeness of the Companys financial
and other disclosures.
Audit
Committees Role in Connection with the Companys
Report on Internal Controls
The Audit Committee reviewed managements report on
internal control over financial reporting required under
Section 404 of the Sarbanes-Oxley Act of 2002 and related
rules. As part of this review, the Audit Committee reviewed the
basis for managements conclusions in that report.
Throughout fiscal 2011, the Audit Committee reviewed the results
of managements plan for documenting and testing controls,
any deficiencies discovered, and the resulting remediation of
any such deficiencies.
Review and
Discussions with Independent Registered Public Accounting
Firm
In its meetings with representatives of PwC, the Audit Committee
asked the independent registered public accounting firm to
address and discuss their responses to several questions that
the Audit Committee believed were particularly relevant to its
oversight. These questions included:
|
|
|
|
|
Are there any significant judgments made by management in
preparing the financial statements that would have been made
differently had PwC itself prepared and been responsible for the
financial statements?
|
|
|
|
Based on PwCs experience and its knowledge of the Company,
do the Companys financial statements fairly present to
investors, with clarity and completeness, the Companys
financial position and performance for the reporting period in
accordance with U.S. GAAP and SEC disclosure requirements?
|
|
|
|
Based on PwCs experience and its knowledge of the Company,
has the Company implemented internal controls over financial
reporting that are appropriate for the Company?
|
|
|
|
During the course of the fiscal year, has PwC received any
communication or discovered any information indicating any
improprieties with respect to the Companys accounting and
reporting procedures or reports?
|
The Audit Committee also has discussed with PwC that PwC is
retained by the Audit Committee and therefore, must raise any
concerns about the Companys financial reporting and
procedures directly with the Audit Committee. Based on these
discussions, its discussions with management, and its review of
applicable periodic reports and financial statements, the Audit
Committee believes it has a reasonable basis for its oversight
judgments and for recommending that the Companys audited
financial statements be included in the Companys Annual
Report on
Form 10-K
for the fiscal year ended June 30, 2011.
Compensation
Committee
Membership
The current members of the Compensation Committee are identified
in the Directors and Committee Membership table
above.
10
Scope and
Authority
The Compensation Committee (a) reviews and recommends
compensation and benefits of the Chief Executive Officer for
approval by the independent directors of the Company,
(b) reviews and approves compensation and benefits for all
other executive officers of the Company, and
(c) establishes and reviews general policies relating to
compensation and benefits for the Companys employees. The
Compensation Committee also recommends, for approval by the
Board, compensation of non-employee directors. The Compensation
Committee reviews and approves the incentive cash bonus plans of
the Company and grants under the Incentive Plan.
Charter
The Compensation Committee has adopted a written charter, a copy
of which is posted at the Investor
Relations Corporate
Governance Compensation Committee
Charter section of the Companys website located at
www.harrisinteractive.com.
Compensation
Committee Interlocks and Insider Participation
None of the members of the Compensation Committee during fiscal
2011 (identified in the Directors and Committee
Membership table above) is or has been an officer or
employee of Harris Interactive or any of its subsidiaries. No
interlocking relationship, as described in SEC
Regulation S-K
Item 407(e)(4), existed during the last completed fiscal
year between the Companys Board or Compensation Committee
and the board of directors or compensation committee of any
other company.
Procedures for
Determination of Compensation
The Compensation Committee oversees the design, development and
implementation of the compensation for the Companys
non-employee directors, Chief Executive Officer, and other
executive officers.
For directors, from time to time, the Companys Human
Resources department gathers data regarding peer group
compensation. The most recent peer group comparison was done in
fiscal 2007 for a peer group consisting of Arbitron, Inc.,
Digitas, Forrester Research, Inc., Greenfield Online, Inc.,
National Research Corporation, Net Ratings, Inc., and Opinion
Research Corporation. The Compensation Committee reviews the
peer group data, information from other sources such as the
annual director compensation survey published by the National
Association of Corporate Directors, the Companys financial
performance, and the scope of activity of the Board and its
respective Committees and, based upon that review, the
Compensation Committee recommends cash
and/or
equity compensation for directors to the full Board for final
approval.
The process used for determination of compensation for the
Companys executive officers, including the Chief Executive
Officer, is described below under Compensation Discussion
and Analysis Role of Compensation Committee and
Chief Executive Officer; Procedures for Determination of
Compensation.
Role of
Compensation Consultants
The role of consultants in the determination of compensation is
discussed below under Compensation Discussion and
Analysis Role of Compensation Consultants.
Nominating and
Governance Committee
Membership
The current members of the Nominating and Governance Committee
are identified in the Directors and Committee
Membership table above.
11
Scope and
Authority
The Nominating and Governance Committee (a) makes
recommendations to the Board regarding the overall structure,
size and composition of the Board, (b) selects director
nominees for approval at the annual meeting of the
Companys stockholders, (c) makes recommendations to
the Board regarding Committees of the Board and membership on
those Committees, (d) oversees matters related to
succession planning for the office of the Chief Executive
Officer, and (e) oversees matters related to the governance
of the Company.
Charter
The Nominating and Governance Committee has adopted a written
charter, a copy of which is posted at the Investor
Relations Corporate
Governance Nominating and Governance
Committee Charter section of the Companys website
located at
www.harrisinteractive.com.
Director
Nomination Process
The Nominating and Governance Committee believes that any
nominee recommended by the Committee for a position on the Board
must have personal character and integrity, must have sound
judgment, must be willing to commit the time required for Board
service, must have a commitment to representing the interests of
all of the Companys stockholders, must have experience
relevant to the Company in one or more fields, and must have
knowledge of corporate governance issues and practices. In
considering candidates for the Board, the Nominating and
Governance Committee requires that independent directors, as
defined under Nasdaq Rule 5605(a)(2), comprise a
substantial majority of the Board. The Committee also requires
that at least three of such independent directors must qualify
as independent under SEC
Rule 10A-3(b)(1)
and also satisfy the financial literacy requirements for Audit
Committee membership, and that at least one such member of the
Audit Committee be a financial expert as defined in
Item 407(d)(5) of
Regulation S-K
promulgated by the SEC.
The Nominating and Governance Committee further believes that
one or more, but not necessarily all, of the members of the
Board should have:
|
|
|
|
|
experience with compensation, executive development, and
executive recruitment matters;
|
|
|
|
market research industry expertise;
|
|
|
|
experience with mergers and acquisitions;
|
|
|
|
experience with strategic and operations planning;
|
|
|
|
experience with public company operations;
|
|
|
|
experience as a senior executive;
|
|
|
|
expertise related to global markets;
|
|
|
|
knowledge of crisis management; and
|
|
|
|
experience with investor and media relations.
|
Consistent with these criteria for potential director
candidates, the Board values diversity of talents, skills,
abilities and experiences, and believes that the diversity that
exists on the Board provides significant benefits to the
Company. Although there is no specific diversity policy, the
Nominating and Governance Committee also may consider the
diversity of its members and potential candidates in selecting
new directors.
Procedures used by the Nominating and Governance Committee in
identifying and evaluating candidates for election to the Board
are posted at the Investor Relations
Corporate Governance Nominating
and Governance Committee Nominating Procedures section of
the Companys website located at
www.harrisinteractive.com.
The Committee believes that
the continuing service of
12
qualified incumbents promotes stability and continuity in the
boardroom, contributing to the Boards ability to work as a
collective body, while giving the Company the benefit of the
familiarity and insight into the Companys affairs that its
directors have accumulated during their tenure. Accordingly, the
process of the Committee for identifying nominees reflects the
Committees practice of re-nominating incumbent directors
who continue to satisfy the Committees criteria for
membership on the Board, who the Committee believes continue to
make important contributions to the Board, and who consent to
continue their service on the Board. Consistent with this
policy, in considering candidates for election at annual
meetings of stockholders, the Committee will first determine the
incumbent directors whose terms expire at the upcoming meeting
and who wish to continue their service on the Board. The
Committee will evaluate the qualifications and performance of
the incumbent directors who desire to continue their service. In
particular, as to each such incumbent director, the Committee
will:
|
|
|
|
|
consider whether the director continues to satisfy the
qualifications for director candidates adopted by the Committee
from time to time, including, among others, compliance with the
Companys Code of Ethics and the Companys policies
related to trading in the Companys securities, director
ownership of Company stock, and majority vote for directors;
|
|
|
|
assess the performance of the director including, among others,
attendance at Board and Committee meetings, attendance at the
annual meeting of stockholders, and participation in director
education, during the preceding term; and
|
|
|
|
determine whether any special, countervailing considerations
exist against re-nomination of the director.
|
The Committee will, absent special circumstances, propose the
incumbent director for re-election if the incumbent consents to
re-nomination and the Committee determines that the incumbent
continues to be qualified, has satisfactorily performed his or
her duties as director during the preceding term, and there
exist no reasons, including considerations relating to the
composition and functional needs of the Board as a whole, why in
the Committees view the incumbent should not be
re-nominated.
The Committee will identify and evaluate new candidates for
election to the Board where there is no qualified and available
incumbent, including for the purpose of filling vacancies
arising by reason of the resignation, retirement, removal,
death, or disability of an incumbent director, or if the
directors decide to expand the size of the Board. The Committee
will solicit recommendations for nominees from persons whom the
Committee believes are likely to be familiar with qualified
candidates. These persons may include members of the Board and
management of the Company. The Committee also may determine to
engage a professional search firm to assist in identifying
qualified candidates. As to each recommended candidate that the
Committee believes merits consideration, the Committee will:
|
|
|
|
|
cause to be assembled information concerning the background and
qualifications of the candidate, including information
concerning the candidate required to be disclosed in the
Companys proxy statement under the rules of the SEC and
any relationship between the candidate and the person or persons
recommending the candidate;
|
|
|
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determine if the candidate satisfies the qualifications required
by the Committee of candidates for election as director,
including, among others, the candidates agreement to
comply with the Companys Code of Ethics and the
Companys policies related to trading in the Companys
securities, director ownership of Company stock, and majority
vote for directors;
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determine if the candidate possesses any of the specific
qualities or skills that under the Committees policies
must be possessed by one or more members of the Board;
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consider the contribution that the candidate can be expected to
make to the overall functioning of the Board; and
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consider the extent to which the membership of the candidate on
the Board will promote diversity among the directors.
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The Committee may, in its discretion, solicit the views of the
Chief Executive Officer, other members of the Companys
senior management, and other members of the Board regarding the
qualifications and suitability of candidates to be nominated as
directors. In addition, in its discretion, the Committee may
designate one or more of its members to interview any proposed
candidate. Based on all available information and relevant
considerations, the Committee will select a candidate who, in
the view of the Committee, is most suited for membership on the
Board.
In making its selection, the Committee will evaluate candidates
proposed by stockholders under criteria similar to the
evaluation of other candidates, including among others the
candidates agreement to comply with the Companys
Code of Ethics and the Companys policies related to
trading in the Companys securities, director ownership of
Company stock, and majority vote for directors. The Committee
may consider, as one of the factors in its evaluation of
stockholder recommended nominees, the size and duration of the
interest of the recommending stockholder or stockholder group in
the equity of the Company. The Committee also may consider the
extent to which the recommending stockholder intends to continue
holding its equity interest in the Company, including, in the
case of nominees recommended for election at an annual meeting
of stockholders, whether the recommending stockholder intends to
continue holding its equity interest at least through the time
of such annual meeting.
On December 7, 2010 and April 6, 2011, respectively,
at the recommendation of the Nominating & Governance
Committee, the Board appointed Messrs. Beard and Gould to
the Board to fill existing vacancies on the Board.
The Company did not pay any fee to a third party to identify,
evaluate, or assist with the identification or evaluation of
director nominees during fiscal 2011.
Nominees for
Election at the 2011 Annual Meeting
The Nominating and Governance Committee has nominated and
recommended Steven L. Fingerhood for election to the Board
by the stockholders at the 2011 Annual Meeting.
Candidates
Recommended by Stockholders
Stockholders may recommend qualified director candidates for
consideration by the Nominating and Governance Committee using
procedures posted at the Investor
Relations Corporate
Governance Submissions by Security
Holders of Nominations for the Board of Directors section
of the Companys website located at
www.harrisinteractive.com.
The procedures generally
require that the recommendation be submitted in writing by mail,
courier, or personal delivery, addressed to: Chairman of the
Nominating and Governance Committee of the Board of Directors,
c/o Harris
Interactive Inc., Corporate Secretary, 161 Sixth Avenue, New
York, New York 10013. The envelope should indicate that it
contains a stockholder recommendation for director nomination.
Submissions should be as required by the procedures and in
general must include:
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the stockholders name, address, telephone number, number
of shares owned, length of period held, proof of ownership, and
statement as to whether the stockholder has a good faith
intention to continue to hold the reported shares through the
next annual meeting of stockholders;
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name, age, and address of the candidate;
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a detailed resume describing, among other things, the
candidates educational background, occupation, five years
business experience, and material outside commitments (e.g.,
memberships on other boards and committees, charitable
foundations, etc.);
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a description of all arrangements or understandings between the
stockholder and the nominee and any other person or persons
(naming them) pursuant to which the nomination is being made by
the stockholder;
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information regarding the nominees ownership of securities
of the Company, certain types of legal proceedings, and business
relationships and transactions between the nominee and the
Company;
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all other information regarding the candidate that would be
required to be included in a proxy statement filed pursuant to
the then-current proxy rules of the SEC; and
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the candidates written consent: (i) to being named in
the proxy statement as a nominee and to serving as a director if
elected, and (ii) to comply with all policies applicable to
directors of the Company including, among others, the
Companys Code of Ethics and the Companys policies
related to trading in the Companys securities, director
ownership of Company stock, and majority vote for directors.
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Nominating recommendations for an annual meeting of stockholders
must be received by the Company at least 90 calendar days prior
to the first anniversary of the date of the proxy statement for
the prior annual meeting of stockholders. The Nominating and
Governance Committee will review and evaluate each candidate
whom it believes merits serious consideration using the
Nominating and Governance Committee Nominating Procedures
described above.
In addition to recommending candidates to the Nominating and
Governance Committee, a stockholder may directly nominate a
director by giving written notice in proper written form to the
Corporate Secretary pursuant to the Bylaws of the Company, which
are posted at the Investor Relations
Corporate Governance Bylaws
section of the Companys website located at
www.harrisinteractive.com.
To be timely, a
stockholders notice to the Corporate Secretary must be
delivered to or mailed and received at the principal executive
offices of the Company not less than 90 calendar days nor more
than 120 calendar days before the first anniversary of the date
of the proxy statement for the prior annual meeting of
stockholders. To be in proper written form, a stockholders
notice to the Corporate Secretary must set forth as to each
person whom the stockholder proposes to nominate for election as
a director:
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the name, age, business address, and residence address of the
person;
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the principal occupation or employment of the person;
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the class or series and number of shares of stock of the Company
that are owned beneficially or of record by the person; and
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any other information relating to the person that would be
required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies
for election of directors pursuant to Section 14 of the
Securities Exchange Act, and the rules and regulations
promulgated thereunder.
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In addition, the notice must set forth as to the stockholder
giving the notice:
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the name and record address of such stockholder;
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the class or series and number of shares of stock of the Company
which are owned beneficially or of record by such stockholder;
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a description of all arrangements or understandings between such
stockholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the
nomination(s) are to be made by such stockholder;
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a representation that such stockholder intends to appear in
person or by proxy at the meeting to nominate the persons named
in its notice; and
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any other information relating to such stockholder that would be
required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies
for election of directors pursuant to Section 14 of the
Securities Exchange Act and the rules and regulations
promulgated thereunder.
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Such notice must be accompanied by a written consent of each
proposed nominee to being named as a nominee and to serve as a
director if elected.
15
Stockholder
Communications with the Board
The Companys policy is to facilitate communications
between stockholders and other interested parties and the Board.
Stockholders wishing to communicate with the Board should follow
the detailed procedures posted at the Investor
Relations Corporate
Governance Procedure for Stockholder
Communications with the Board of Directors section of the
Companys website located at
www.harrisinteractive.com.
The procedures, as detailed on the website, provide for
communications to be in writing and mailed to the Board of
Directors, Harris Interactive Inc.,
c/o Corporate
Secretary, 161 Sixth Avenue, New York, New York 10013. The Board
has adopted a separate procedure for communications regarding
accounting, auditing, and financial reporting matters, which may
be found at the Investor Relations
Corporate Governance Complaint
Procedure for Accounting, Auditing, and Financial Reporting
Matters section of the Companys website located at
www.harrisinteractive.com.
Board Leadership
Structure
The Board believes that the segregation of the roles of Board
Chairman and the Chief Executive Officer ensures better overall
governance of the Company and provides meaningful checks and
balances regarding its overall performance. This structure
allows our Chief Executive Officer to focus on developing and
implementing the Companys business plans and supervising
the Companys
day-to-day
business operations, and allows our Chairman to lead the Board
in its oversight and advisory roles. Because of the many
responsibilities of the Board and the significant time and
effort required by each of the Chairman and the Chief Executive
Officer to perform their respective duties, the Company believes
that having separate persons in these roles enhances the ability
of each to discharge those duties effectively and, as a
corollary, enhances the Companys prospects for success.
The Board also believes that having separate positions provides
a clear delineation of responsibilities for each position and
fosters greater accountability of management. For the foregoing
reasons, the Board has determined that its leadership structure
is appropriate and in the best interests of the Companys
stockholders.
Boards Role
in Risk Oversight
The full Board oversees an enterprise-wide approach to risk
management, designed to support the achievement of the
Companys strategic plans and objectives, improve long-term
organizational performance, and enhance stockholder value. It is
managements responsibility to manage risks and bring to
the Boards attention material risks facing the Company.
The Board has overall responsibility for the oversight of the
Companys risk management process. The Boards
oversight responsibility includes monitoring the steps
management is taking to manage material risks, and assessing
managements appetite for risk in the context of the
Companys operations and strategy. The Board carries out
its oversight responsibility directly and through the delegation
to its Committees of responsibilities related to the oversight
of certain risks, as follows:
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The Audit Committee, as part of its internal audit and
independent auditor oversight, is responsible for reviewing the
Companys risk assessment and risk management and discusses
risks as they relate to its review of the Companys
financial statements, the evaluation of the effectiveness of
internal control over financial reporting, compliance with legal
and regulatory requirements, and the performance of the internal
audit function, among other responsibilities set forth in the
Audit Committee Charter.
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The Compensation Committee monitors risks associated with the
design and administration of the Companys compensation
programs, including its performance-based compensation programs,
to promote an environment which does not encourage unnecessary
and excessive risk-taking by the Companys employees. The
Committee also reviews risks related to management resources,
including the depth of the Companys senior management.
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The Nominating and Governance Committee oversees risk as it
relates to the Companys corporate governance structure and
processes, the identification and recommendation of individuals
qualified to become directors, and succession planning.
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On a periodic basis, the Board and its Committees receive
information and reports from management on material risks that
the Company faces and how the Company is seeking to control the
risks if and when appropriate, and each Committee makes periodic
reports regarding risk oversight in its area of responsibility
to the full Board.
Governance
Guidelines
In September 2006, the Board adopted the Governance Guidelines.
The Governance Guidelines generally describe the respective
roles and responsibilities of the Board and management, and the
expectations of individual directors. The Governance Guidelines,
among other matters:
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require a substantial majority of the Board to be independent;
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continue the Companys current practice of having both a
Chairman of the Board and a Lead Director, both of whom are
independent;
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require a member of management to resign from the Board upon
termination of employment unless otherwise determined by the
Nominating and Governance Committee;
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require a non-employee director whose employment status,
position, or business or professional association changes to
notify the Nominating and Governance Committee, which will
consider that factor at the time it considers whether to
re-nominate the director;
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establish a general policy that directors should limit their
service on boards of publicly traded companies to no more than
five (including the Companys Board), and should limit
their service on audit committees of such companies to no more
than three (including the Companys Audit Committee), and
requires the Nominating and Governance Committee to take any
exceptions into account at the time it considers whether to
re-nominate the director;
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create an expectation that each director will attend at least
one director education program each year;
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establish guidelines for Board operations;
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require that a meaningful portion of non-employee director
compensation will be provided in, or based upon, the
Companys stock in order to align interests of directors
with those of the stockholders;
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require directors to hold at least 25,000 shares of the
Companys common stock, of which at least 10,000 should be
purchased either directly or through exercise of options,
subject to a phase-in process; and
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require directors to attend each annual meeting of stockholders
in person absent compelling circumstances preventing such
attendance.
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In addition, the Governance Guidelines establish a majority vote
standard for directors, as described below.
Majority Vote
Policy
The Board has adopted the following policy providing for
resignation of a director upon receipt of a greater number of
Withhold votes than For votes in an
election of directors.
In an uncontested election of directors (i.e., an election where
the only nominees are those recommended by the Board), any
nominee for director who receives a greater number of votes
withheld from
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his or her election than votes for his or her
election will promptly tender his or her resignation to the
Chairman of the Board following certification of the stockholder
vote.
The Nominating and Governance Committee of the Board will
promptly consider the resignation submitted by a director
receiving a greater number of votes withheld than
votes for his or her election, and will recommend to
the Board whether to accept or reject the tendered resignation.
In making its recommendation, the Nominating and Governance
Committee may consider any factors or other information that it
considers appropriate and relevant, including without
limitation, any known stated reasons why stockholders
withheld votes for election from such director, the
length of service and qualifications of the director, the
directors contributions to the Company, and this policy.
The Board will act to accept or reject the tendered resignation,
taking into account the Nominating and Governance
Committees recommendation and any other information and
factors it deems relevant, within 90 days after the date of
certification of the election results. Promptly after making its
decision, the Board will publicly disclose, by a filing with the
SEC, its decision regarding the tendered resignation and the
rationale behind it.
Any director who tenders his or her resignation pursuant to this
provision will not participate in the Nominating and Governance
Committee recommendation or Board consideration as to whether or
not to accept the tendered resignation.
If one or more director resignations are accepted by the Board,
the Nominating and Governance Committee will recommend to the
Board whether to fill such vacancy or vacancies pursuant to the
provisions of Article III, Section 5 of the Bylaws of
the Company, or to reduce the size of the Board pursuant to the
provisions of Article III, Section 1 of the Bylaws of
the Company. If the Board determines to fill such vacancy or
vacancies, the Nominating and Governance Committee will nominate
a person or persons to fill such vacancy or vacancies for
consideration by the Board.
If a directors resignation is not accepted by the Board,
such director will continue to serve until the expiration of his
or her term, or his or her earlier resignation or removal.
AUDIT COMMITTEE
REPORT
The information contained in this Audit Committee Report shall
not be deemed to be soliciting material or to be
filed with the SEC or subject to Regulation 14A
or 14C promulgated by the SEC or the liabilities of
Section 18 of the Securities Exchange Act, except to the
extent that the Company specifically requests that the
information be treated as soliciting material or specifically
incorporates it by reference into a document filed under the
Securities Act of 1933, as amended (the Securities
Act), or the Securities Exchange Act. The information
contained in this Audit Committee Report shall not be deemed to
be incorporated by reference into any filing under the
Securities Act or the Securities Exchange Act, except to the
extent the Company specifically incorporates it by reference.
The Audit Committee has:
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reviewed and discussed the Companys audited financial
statements for the fiscal year ended June 30, 2011,
included in the Companys Annual Report on
Form 10-K,
with the Companys management;
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discussed with PwC the matters required to be discussed by
Statement on Auditing Standards No. 61, Communication with
Audit Committees, as amended and as adopted by the Public
Accounting Oversight Board in Rule 3200T;
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received from PwC the written disclosures and the letter
required by the Public Company Oversight Board in
Rule 3526, Communication with Audit Committees
Concerning Independence regarding the independent
accountants communications with the Audit Committee
concerning independence, discussed with PwC its independence,
and concluded that PwC is independent from the Company and its
management; and
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reviewed and discussed the information set forth herein under
Corporate Governance Committees of the Board
Audit Committee with the Companys
management, and based upon such review and discussion,
recommended to the Board that such information be included in
this Proxy Statement.
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Based upon its review and discussion with management and PwC,
the Companys independent registered public accountants,
the Audit Committee recommended to the Board that the
Companys audited financial statements be included in the
Companys Annual Report on
Form 10-K
for the fiscal year ended June 30, 2011 for filing with the
SEC.
Submitted by the Audit Committee of the Board:
Mr. David Brodsky (Chairman)
Mr. Marty Beard
Mr. Steven L. Fingerhood
Mr. James R. Riedman
Mr. Howard L. Shecter
Mr. Antoine G. Treuille
COMPENSATION
COMMITTEE REPORT
The information contained in this Compensation Committee Report
shall not be deemed to be soliciting material or to
be filed with the SEC or subject to
Regulation 14A or 14C promulgated by the SEC or the
liabilities of Section 18 of the Securities Exchange Act,
except to the extent that the Company specifically requests that
the information be treated as soliciting material or
specifically incorporates it by reference into a document filed
under the Securities Act or the Securities Exchange Act. The
information contained in this Compensation Committee Report
shall not be deemed to be incorporated by reference into any
filing under the Securities Act or the Securities Exchange Act,
except to the extent the Company specifically incorporates it by
reference.
The Compensation Committee has reviewed and discussed the
information set forth herein under Corporate
Governance Committees of the Board
Compensation Committee and Compensation Discussion
and Analysis with the Companys management, and,
based upon such review and discussion, recommended to the Board
that such information be included in this Proxy Statement.
Submitted by the Compensation Committee of the Board:
Mr. James R. Riedman (Chairman)
Mr. Marty Beard
Mr. David Brodsky
Mr. Steven L. Fingerhood
Mr. Howard L. Shecter
Mr. Antoine G. Treuille
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
Under the direction of the Compensation Committee, the Company
has designed a compensation program for the NEOs (defined below
under Compensation of Directors and Executive
Officers) intended to balance the need to provide
competitive compensation with accountability for performance.
The program provides:
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cash base compensation and contractual protections competitive
within the industry, designed to enable the Company to recruit
and retain highly qualified individuals;
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cash bonus incentives that directly link pay to performance,
designed to motivate executive officers to deliver superior
results; and
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long-term equity incentives designed to align the interests of
executive officers with those of the Companys stockholders
in achieving long-term growth.
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The Companys compensation programs are designed to deliver
competitive total compensation and provide flexibility to reward
performance and to adjust for evolving business conditions.
Generally, the Compensation Committee does not react to
short-term changes in business performance in determining the
mix of compensation elements. The Committee does not rely on the
formulaic achievement of financial goals in awarding
compensation except in certain portions of the Companys
cash bonus plans, and in certain awards of performance-based
equity incentives.
Consistent with the Committees focus on encouraging
collaboration at all levels of the Company, the types of
compensation and benefits provided to the NEOs are similar in
most respects to those provided to the Companys other
executive officers. The Compensation Committee avoids providing
significant perquisites to the NEOs, and has provided only
limited severance and change in control protection.
The Companys compensation programs contain features to
mitigate excessive risk-taking, including among others the
Companys ability to recover certain amounts received by
the Companys Chief Executive Officer and the other NEOs in
the event of accounting restatements due to material
non-compliance of the Company with any financial reporting
requirement, as described under Compensation Discussion
and Analysis
Management of
Compensation-Related Risk.
Implementing the
Compensation Committees Objectives
Overall
Competitive Compensation Package
The Companys compensation programs are designed to provide
a competitive, guaranteed base salary, bonuses that reward both
strong Company financial and individual performance, and equity
incentives that are aligned with the long-term performance of
the Companys stock. In fiscal 2011, competitive
compensation was primarily driven by the need to meet market
conditions in the recruitment of new executive officers and in
the retention of key executive officers. In future years, the
Compensation Committee may more closely reference peer group
benchmarks or other sources of competitive data, as it had in
fiscal years immediately prior to 2009.
Individual factors affecting overall compensation for the NEOs
include:
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level of responsibility and experience;
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achievement of established individual goals;
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leadership qualities;
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operational performance; and
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fostering the importance of high standards of ethical and legal
compliance throughout the Company.
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Mix of Types
of Compensation
The Compensation Committee strives to achieve an appropriate mix
between types of compensation in order to meet the
Companys objectives. Any apportionment goal is not applied
rigidly and does not control compensation decisions. Rather, the
Compensation Committee assesses an executive officers
total compensation opportunities and whether the Company has
provided the appropriate mix of incentives to remain
competitive, take into account recent results, and motivate
long-term performance. The Committee therefore balances
compensation elements that provide a competitive base with those
that provide pay for Company financial and individual
performance and those that are aligned with long-term
performance of the Companys stock. The Compensation
Committee may periodically engage outside professional firms to
assist in understanding compensation levels in the broader
marketplace, and will
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periodically assess this decision based on need and the
Companys financial situation. Additionally, although the
Compensation Committee may consider peer group compensation
levels as a reference point, its compensation decisions are
based on the totality of all relevant facts and circumstances to
be competitive in the marketplace, rather than a rigid,
formulaic approach. In fiscal 2011, the Compensation Committee
did not engage the services of a compensation consultant or
benchmark compensation elements against a peer group.
The Compensation Committee applies a different mix of base
salary and cash bonus compensation to different executive
officer positions, and it reviews the mix each year.
The Compensation Committee seeks to align the interests of the
NEOs with those of its stockholders by providing a significant
portion of total compensation in the form of equity grants,
generally through the Incentive Plan. The Committee also uses
equity awards as incentives for the NEOs to continue employment
with the Company over the longer term, and therefore such awards
generally include four-year vesting schedules. In fiscal 2011,
the Compensation Committee made time-based equity incentive
grants to executive officers in connection with their initial
employment, assumption of additional responsibilities,
promotion,
and/or
reward for exceptional performance in their respective areas of
responsibility. In June 2011, the Compensation Committee made
performance-based equity grants to Messrs. Angrisani,
Narowski, de Vere and Levin to offer an incentive that is
closely aligned with increasing shareholder value, as, absent a
change of control, the options only vest upon the achievement of
certain stock price
and/or
adjusted EBITDA targets. See the Grants of Plan Based
Awards in Fiscal 2011 table below for further detail
regarding the vesting conditions for the performance-based
equity grants made to Messrs. Angrisani, Narowski, de Vere
and Levin in fiscal 2011.
Base
Salary Remaining Competitive
Base salary is part of each executive officers
compensation package because the Compensation Committee believes
that the Company must guarantee a fixed portion of cash
compensation in order to remain competitive in recruiting and
retaining executive officers.
Base salaries are established by taking into account the
totality of all relevant facts and circumstances, including the
level of responsibility and role of the individual NEO. Although
the Compensation Committee takes account of the need to be
competitive in the marketplace, the experience, talent, and
responsibilities of individual executive officers are the
primary determinant of individual salaries. Adjustments are made
on a subjective basis taking into account the executive
officers performance. The Compensation Committee reviews
base salaries annually, and in the interim if an NEOs
position or responsibilities change. Salaries are not
automatically increased on an annual basis if the Committee
believes that a raise is not warranted by either individual or
Company performance, or that other forms of compensation are
more appropriate to further stated objectives.
Mr. Angrisani was hired by the Company in June 2011 to
serve as its Interim Chief Executive Officer. Mr. Angrisani
is not receiving a base salary in fiscal 2011. Rather, his
compensation consists of equity-based compensation and a
potential performance-based cash bonus. See Employment
Agreements with Named Executive Officers below for further
detail regarding Mr. Angrisanis compensatory
arrangement with the Company. Angrisani Turnarounds, LLC
(Angrisani Turnarounds), a company of which
Mr. Angrisani serves as Chairman and Chief Executive
Officer, is receiving a monthly retainer from the Company for
making Mr. Angrisani available to the Company as its
Interim Chief Executive Officer. See Transactions with
Related Persons below for further detail regarding the
Companys arrangement with Angrisani Turnarounds.
Mr. Bhalla was hired by the Company in October 2010. In
determining his base salary, the Compensation Committee
considered the level of responsibility of the position for which
he was being hired, his previous experience, and the need to
offer base compensation which was competitive within the
marketplace for his role and responsibilities.
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In January 2011, Mr. de Vere was given management
responsibilities for the Companys U.S. Client
Services, at which time the Compensation Committee approved a
commensurate increase in his annual base salary from $255,000 to
$275,000. In June 2011, the Compensation Committee approved a
monthly bonus of $3,500 for Mr. Narowski in recognition of
his service as Interim Chief Financial Officer.
Mr. Narowski will receive the monthly bonus until such time
that he no longer serves as the Companys Interim Chief
Financial Officer. Also in June 2011, Mr. Levin was
promoted to serve as the Companys Chief Administrative
Officer, while still maintaining his role as the Companys
Executive Vice President, General Counsel and Corporate
Secretary, at which time the Compensation Committee approved a
commensurate increase in his annual base salary from $255,000 to
$275,000.
The responsibilities of Ms. Till and Messrs. Micali
and Salvoni did not change for fiscal 2011 and in evaluations
undertaken prior to their departures from the Company, the
Compensation Committee determined that neither Company overall
performance nor individual performance justified any base salary
increase.
Cash Bonus
Plans Linking Compensation to
Performance
The Companys cash bonus plans are designed to directly
link individual executive officers, including the
NEOs, pay to Company, individual and, in some cases,
specific business unit performance. The cash bonus plans are
structured with the intent that they be equitable to
stockholders.
The Compensation Committee establishes target bonus amounts,
within contractual requirements related to minimum targets for
certain of the NEOs, on a subjective basis after a review of
recommendations made by management, the number of participants
in the Companys bonus plans, the aggregate of target
bonuses under those plans as a percentage of overall Company
expense, the relationship of potential bonus payments to the
amount of earnings retained for the benefit of stockholders, the
relative roles and responsibilities of the participants covered
by the bonus plans, the relative ability of the participants to
impact overall Company performance, and the mix of other salary
and equity incentive compensation for each participant. The
target bonus established for each of the NEOs in fiscal 2011 is
shown in a table below.
Under the corporate bonus plan, a fixed dollar pool is
established for each fiscal year, with actual payouts increasing
or decreasing based upon achievement of pre-set financial
metrics. In establishing the size of the bonus pool under the
corporate bonus plan in fiscal 2011, the Compensation Committee
determined that the aggregate target bonus pool should not
exceed the net income retained for the benefit of stockholders
after payment of bonuses. The Compensation Committee has yet to
approve the fiscal 2012 corporate bonus plan. After approval by
the Compensation Committee, the Company will file a Current
Report on
Form 8-K
with the SEC that summarizes the fiscal 2012 corporate bonus
plan.
Actual payouts under the corporate bonus plan in each fiscal
year are determined through targeted levels of achievement of
specified metrics and management objectives. The metrics are
intended to be those most closely linked to Company performance
objectives over which the Compensation Committee believes the
plan participants have the most direct control.
The fiscal 2011 corporate bonus plan (the 2011 Bonus
Plan) was designed to establish a pool of funds (the
2011 Bonus Pool) to be available for making bonus
payments to the NEOs as well as certain other employees. The
funding level of the 2011 Bonus Pool was based on the
Companys performance relative to budgeted fiscal 2011
consolidated operating income, as approved by the Board in
connection with establishing the Companys fiscal 2011
annual budget (the 2011 Financial Target). The
percentage achievement of the 2011 Financial Target determined
the extent to which the 2011 Bonus Plan was to be funded.
Specifically, under the 2011 Bonus Plan, 100% of the 2011 Bonus
Pool was to be funded if performance was equal to 159% of the
2011 Financial Target, and not funded at all if performance was
less than 75% of the 2011 Financial Target (Threshold
Performance). Between 75% and 159% performance, a sliding
scale was to apply. The Board, in its discretion, had the option
of increasing the size of the 2011 Bonus Pool if the Company
achieved greater than 159% of the 2011 Financial Target.
22
Under the 2011 Bonus Plan, 64% of Ms. Tills bonus
payout was based on the Companys performance relative to
the 2011 Financial Target and 36% was based upon the
Boards evaluation of her performance, with emphasis in the
Boards discretion on individual management objectives
including achieving budgeted operating income, improving global
operational efficiency, and building a strong management team.
For each of the other NEOs (except for Mr. Angrisani), 70%
of the bonus payout under the 2011 Bonus Plan was based on the
Companys performance relative to the 2011 Financial Target
and 30% was based on the NEOs managers evaluation of
the NEOs performance in his area of responsibility.
Although Mr. Angrisani commenced employment with the
Company shortly before the end of fiscal 2011, he was not
eligible to receive a bonus payout under the 2011 Bonus Plan.
No bonus was payable to the NEOs under the 2011 Bonus Plan since
the Company did not achieve Threshold Performance.
Fiscal 2011 target bonuses under the 2011 Bonus Plan for each of
the NEOs as compared to actual fiscal 2011 bonus payouts were as
follows:
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|
|
|
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|
|
|
|
|
Fiscal 2011 Target
|
|
Fiscal 2011 Bonus
|
Name
|
|
Bonus($)
|
|
Payout($)
|
|
Al Angrisani
|
|
$
|
|
|
|
|
|
|
Kimberly Till(1)
|
|
$
|
600,000
|
|
|
|
|
|
Eric W. Narowski
|
|
$
|
54,900
|
|
|
|
|
|
Pavan Bhalla(2)
|
|
$
|
152,500
|
|
|
|
|
|
Michael de Vere
|
|
$
|
110,000
|
|
|
|
|
|
Marc H. Levin
|
|
$
|
110,000
|
|
|
|
|
|
Enzo J. Micali(3)
|
|
$
|
118,000
|
|
|
|
|
|
Robert Salvoni(4)
|
|
|
78,000 GBP
|
|
|
|
GBP
|
|
|
|
|
(1)
|
|
Employed through June 7, 2011
|
|
(2)
|
|
Employed through June 13, 2011
|
|
(3)
|
|
Employed through June 24, 2011
|
|
(4)
|
|
Employed through February 4, 2011
|
On August 16, 2011, the Compensation Committee awarded
retention bonuses to Messrs. Narowski, de Vere and Levin,
in the amounts of $60,000, $100,000 and $100,000, respectively.
The retention bonuses were awarded to encourage their continued
service to the Company during a transition period following the
recent change in Chief Executive Officer of the Company, and is
payable in four equal cash installments on or about
September 15, 2011, December 15, 2011, March 15,
2012 and June 15, 2012, provided, in each case, that the
NEO is employed by the Company in good standing on such date.
Equity
Incentive Compensation Aligning Compensation with
Stockholder Value
The equity incentives provided to each individual are based upon
industry competitive practices and judgments made by the
Compensation Committee as to the individuals relative
position, responsibilities, and historical and expected
contributions to the Company. The Committee also takes into
account the individuals existing stock ownership, previous
stock-based grants, and whether previous grants have
in-the-money
value for retentive purposes. Primary weight is given to the
individuals relative rank and responsibilities. Initial
grants designed to recruit an executive officer to join the
Company have been based on negotiations with the officer, equity
being forfeited by the officer from his or her former employer,
and reference to the Companys historical option grants to
existing executive officers.
23
Under the Incentive Plan, stock options are granted at fair
market value and generally vest over a four-year period. 25%
become exercisable on the one-year anniversary of the grant
date, with the remainder vesting ratably over the remaining
36 months.
The Compensation Committee awards restricted stock at the market
price on the date of grant, typically with a four-year
forfeiture schedule. Forfeitures of 25% of restricted stock
awards lapse on each of the first four anniversaries following
the award date.
From time to time, the Compensation Committee has made certain
performance-based stock option and restricted stock awards to
certain NEOs, based upon the Committees belief that
performance-based awards provide additional linkage between
executive compensation and longer term growth of the Company.
These awards may fully vest in less than four years and
generally will include performance-based vesting requirements in
addition to the continued service requirement.
Under the terms of the Incentive Plan and award agreements under
them, as well as agreements related to awards granted outside of
the Incentive Plan to new hires, all of the equity awards
granted by the Company prior to fiscal 2009 vest immediately
upon a change in control of the Company. Although the
Compensation Committee believes that accelerated vesting upon a
change in control provides an incentive to employees to remain
with the Company and recognizes that the linkage between
performance and stockholder value will not be the same after the
change in control, in fiscal 2009 it changed its policy with
respect to accelerated vesting of equity awards, as follows:
|
|
|
|
|
Generally, grants to the Chief Executive Officer and Chief
Financial Officer become fully vested upon a change in control
of the Company.
|
|
|
|
Generally, grants to executives (other than the Chief Executive
Officer and Chief Financial Officer) only become fully vested
upon a change in control if the acquirer does not assume,
continue, or substitute for the awards as provided in the
Incentive Plan (a Complying Assumption) or, upon a
Complying Assumption, if executives date of termination
occurs upon or in the one-year period immediately following the
change in control unless such date of termination is due to
termination of the executive by the acquirer for
cause (as defined in the applicable equity incentive
agreement) or the executives voluntary termination of his
or her employment without good reason (as defined in
the applicable equity incentive agreement).
|
|
|
|
Generally, grants to all other employees only become fully
vested upon a change in control if there is not a Complying
Assumption.
|
The Compensation Committee believes that these modifications to
the circumstances under which accelerated vesting will occur
upon a change in control better aligns the interests of the
Company and its stockholders. The Compensation Committee will
continue to review its policy regarding the circumstances under
which vesting will occur upon a change in control.
In fiscal 2011, the Compensation Committee awarded non-qualified
time-based stock options and restricted stock, as well as
performance-based stock options. Specifically, during fiscal
2011, the Compensation Committee made the following equity-based
incentive grants to NEOs: (a) in connection with his
initial employment, Mr. Angrisani received (i) shares
of restricted stock, one-thirteenth of which vest on the
thirtieth day of each month commencing in June 2011, subject to
his continued employment on each such date, (ii) incentive
stock options that vest at the end of fiscal 2012, subject to
his continued employment on such date, and
(iii) non-qualified performance based stock options,
subject to the vesting terms described below under
Compensation of Directors and Executive
Officers Outstanding Equity Awards at 2011 Fiscal
Year End, (b) in connection with his initial
employment, Mr. Bhalla received non-qualified time-based
stock options, subject to the Companys standard four-year
vesting schedule described above; (c) in connection with
his promotion and assumption of additional responsibilities, Mr.
de Vere received non-qualified time-based stock options, subject
to the Companys standard four-year vesting schedule
described above; (d) as recognition for their performance,
Ms. Till and Messrs. Narowski, de Vere, Levin, Micali
and Salvoni received non-qualified time-based stock options,
subject to the Companys standard four-year vesting
schedule described above; and (e) for retentive purposes,
Messrs. Narowski, de Vere
24
and Levin received non-qualified performance based stock
options, subject to the vesting terms described below under
Compensation of Directors and Executive
Officers Outstanding Equity Awards at 2011 Fiscal
Year End.
Ms. Till and Messrs. Bhalla, Micali and Salvoni
forfeited all of their unvested stock options when they departed
the Company in fiscal 2011.
Other
Compensation
Deferred
Compensation Plans
The Company does not offer any deferred compensation plans to
its executive officers other than the 401(k) Plan available to
all employees, described below.
401(k)
Plan
The Company maintains a 401(k) Plan for its employees, including
executive officers, to encourage employees to save some
percentage of their cash compensation, through voluntary
deferrals, for their eventual retirement. The 401(k) Plan
permits employees to make such deferrals in a tax efficient
manner. The Company may, in its discretion, match employee
deferrals. Through December 31, 2008, the Company made
matching contributions equal to 50% of the first 8% of
compensation deferred by employees with a cap of $4,000 per
calendar year (subject to IRS limits and non-discrimination
testing). In January 2009, matching contributions were
discontinued as part of the Companys overall plan to
control its costs. Although the Company did not resume matching
contributions during fiscal 2011, it may, in its discretion,
elect to resume matching employee deferrals in the future.
Perquisites and
Other Benefits
Incidental to their employment by, and the nature of their
duties to, the Company, the NEOs receive some compensation in
the forms of perquisites and personal benefits. Historically,
the most common forms of perquisites provided by the Company to
its NEOs are additional life insurance and reimbursement of
attorneys fees in connection with the negotiation of
employment agreements, the cost of which is disclosed in the
footnotes to the Summary Compensation Table below.
The material perquisites and personal benefits received by the
NEOs in fiscal 2011 are described under Employment
Agreements with Named Executive Officers below and are
included in the Summary Compensation Table below.
For fiscal 2011, of the NEOs, only Mr. Salvoni received
total perquisites that exceeded $10,000.
Post-Termination
Compensation
Each of the currently employed NEOs is entitled to receive
severance payments, as described below under Potential
Payments upon Termination or Change in Control, if the
NEOs employment terminates without cause or, in some
cases, for good reason, including in connection with a change in
control of the Company. In addition, with respect to the
currently employed NEOs, Mr. Angrisanis equity based
compensation fully accelerates if there is a change in control,
while Messrs. Narowskis, de Veres, and
Levins equity based compensation fully accelerates if
there is a change in control only if there is not a Complying
Assumption or, upon a Complying Assumption, if their dates of
termination occur upon or in the one-year period immediately
following the change in control unless such date of termination
is due to their termination by the acquirer for
cause (as defined in the applicable equity incentive
agreement) or their voluntary termination without good
reason (as defined in the applicable equity incentive
agreement).
The Compensation Committee believes that these arrangements are
important as a recruitment and retention device, as most of the
companies with which the Company competes for executive talent
have similar agreements in place for their executives. In
addition, to the extent that these arrangements apply to a
change in control of the Company, they help alleviate any
concern NEOs might have regarding their own continued employment
following a change in control, and also help incentivize the
NEOs to remain with the Company to assist in any change in
control transaction the Board determines is appropriate to
pursue. The
25
Committee balances protection of its executive officers upon a
change in control with protection of the Company by making
severance payments available only if the executive officer is
actually terminated by the acquirer without cause or leaves for
good reason after the change in control.
The Company links severance benefits to agreements by the NEOs
not to disclose the Companys confidential information and
not to engage in certain competitive activities, including not
soliciting the Companys employees and customers. An
executive officer will forfeit the right to receive
post-termination compensation if the executive officer breaches
any such restrictive covenant subsequent to his or her departure
from the Company. The Compensation Committee believes that these
provisions provide important protection for the Companys
proprietary information and business.
The Company does not provide excess parachute
payment protection to any of the currently employed NEOs.
In all cases, the Compensation Committee considers the cost, tax
and accounting implications of post-termination payment
arrangements.
Role of
Compensation Committee and Chief Executive Officer; Procedures
for Determination of Compensation
The Compensation Committee has primary responsibility for
assisting the Board in developing and evaluating potential
candidates for executive positions, including the Chief
Executive Officer, and for overseeing the development of
executive succession plans. The Compensation Committee oversees
the design, development, and implementation of the compensation
for the Chief Executive Officer and the other NEOs.
For the Chief Executive Officer, the independent directors of
the Board approve goals and objectives to be considered in
awarding compensation. The Board Chairman and the Compensation
Committee conduct a thorough performance evaluation of the Chief
Executive Officer in light of the established goals and
objectives and other factors, including, among others,
interviews with persons with whom the Chief Executive Officer
has regular interaction. The Compensation Committee then
recommends all forms of Chief Executive Officer compensation,
taking into account the goals and objectives of the
Companys overall compensation program, to the independent
directors of the Board, who have final approval authority over
the Chief Executive Officers compensation package as well
as any target goals and objectives against which the Chief
Executive Officers performance will be measured.
For other executive officers, the Chief Executive Officer and
the Compensation Committee together assess performance and
determine individual compensation, based on initial
recommendations from the Chief Executive Officer and Chief
Administrative Officer. The executive officers do not play a
role in determining their own compensation, other than
discussing individual management objectives with the Chief
Executive Officer and Chief Administrative Officer. In all
instances, the Compensation Committee exercises its discretion
in modifying any recommended adjustments or awards to executive
officers and approving each executive officers
compensation package.
From time to time, the Chief Executive Officer and Chief
Administrative Officer recommend equity awards to be made under
the Incentive Plan. The Compensation Committee, which has
exclusive authority to make such awards to the Chief Executive
Officer and other executive officers, considers such
recommendations together with other factors in determining
whether to make such awards.
Role of
Compensation Consultants
Neither the Company nor the Compensation Committee has an
on-going contractual arrangement with any compensation
consultant who has a role in determining or recommending the
amount or form of executive officer or director compensation.
The Compensation Committee does retain compensation consultants
to assist it with specific issues from time to time. In fiscal
2008, the Compensation Committee used a compensation consultant
to assist in evaluating equity incentive programs and
compensation
26
related to change in control circumstances. The Compensation
Committee has not retained a compensation consultant since that
time.
Equity Grant
Practices
The Compensation Committee has established a policy regarding
the dates for making grants of options, restricted stock, and
restricted stock units under the Incentive Plan. Except in the
case of awards made in connection with acquisitions or other
unique circumstances, including the recent equity awards made to
Mr. Angrisani upon his initial employment and the
performance-based equity awards made to the other currently
employed NEOs and several other key members of management for
retentive purposes, awards are made only on the
15th calendar day of the month in which quarterly results
are publicly announced or, if results are not announced by that
time, seven days following their public release. These dates
were established so that grants would be effective at a time
when the Company expects the most current information regarding
its performance to be available to the public. However, because
the award dates are pre-determined, some awards may be made at a
time when the Company is in possession of material non-public
information. The exercise price of each stock option awarded and
to be awarded under the Incentive Plan was and will be the
closing price of the Companys stock on the date of grant.
The Compensation Committee administers the Incentive Plan,
taking into account recommendations from management. The
Committee selects those individuals to whom equity-based awards
should be granted and determines the amount and terms of those
awards.
Stock Ownership
Guidelines
During fiscal 2007, the Compensation Committee adopted
guidelines that require any person appointed to serve as Chief
Executive Officer, Chief Financial Officer, or Chief Operating
Officer to own Company stock with a value equal to base salary
within five years after the date of appointment to the covered
position. Under the guidelines adopted in fiscal 2007, shares
held in the Companys 401(k) Plan and shares acquired
through the ESPP, as well as vested and unvested
non-performance-based restricted stock, count toward the
requirement, but unexercised stock options and unvested
performance-based restricted stock do not.
All non-employee directors are required by the Governance
Guidelines to own shares as described above in Corporate
Governance Governance Guidelines. All
non-employee directors standing for election in 2011 or
continuing in office are in compliance with stock ownership
requirements.
The Companys policies prohibit all insiders, including
NEOs, from hedging the risk associated with stock ownership
without express consent of the Board, which has never been
requested or granted.
Revised Board
Commitment Regarding Equity-Based Grants to Employees
In October 2007, the Board committed to the Companys
stockholders to limit the number of shares granted via
equity-based awards to employees to an average of 2.7% of the
total shares of common stock outstanding at the end of the
Companys three fiscal years 2008, 2009, and 2010, applying
the following formula: (fiscal 2008% + fiscal 2009% + fiscal
2010%)
¸
3 years
£
2.7% (the 2007 Commitment). Each share of restricted
stock granted is counted as the equivalent of two option shares
for the purpose of calculating the total number of shares
granted in a year under the 2007 Commitment.
Since October 2007, in order to help restore profitability to
its business, the Company significantly restructured its senior
management team and effectuated significant headcount
reductions, resulting in substantial forfeitures from departing
employees of equity-based grants. However, the 2007 Commitment
did not take into consideration these forfeitures. Without
accounting for the forfeitures, the number of shares granted via
equity-based awards to employees as a percentage of total shares
of common stock outstanding (burn rate) in fiscal
years 2008 and 2009 calculated pursuant to the 2007 Commitment
formula were 3.64% and 3.58%, respectively. After accounting for
forfeitures, however, outstanding equity-
27
based grants to employees during the same period decreased by
approximately 2 million shares, or nearly 4% of the
Companys total shares of common stock outstanding.
Due to the lack of adequate flexibility under the 2007
Commitment to attract a new senior management team in fiscal
2009 through use, in part, of equity-based awards and the need
to continue to align the interests of the Companys
employees with the interests of its stockholders, in fiscal 2009
management of the Company engaged in discussions with the
RiskMetrics Group (RiskMetrics) regarding modifying
the 2007 Commitment. In considering whether to support a
modification to the 2007 Commitment, RiskMetrics took into
account its current annual burn rate criteria applicable to the
Company, which would permit an annual burn rate of up to 6.15%.
After discussions with the Companys management,
RiskMetrics proposed modifying the burn rate percentage, without
crediting cancellations or forfeitures, to 4.98% (applied as an
average over the measurement period) and the measurement period
to fiscal years 2009, 2010 and 2011. The Board supported
RiskMetrics proposed modifications and on July 1,
2009 in a Current Report on
Form 8-K
filed with the SEC, the Board announced its commitment to the
Companys stockholders to limit the number of shares
granted via equity-based awards to employees to an average of
4.98% of the total shares of common stock outstanding at the end
of the Companys three fiscal years 2009, 2010 and 2011,
applying the following formula: (fiscal 2009% + fiscal 2010% +
fiscal 2011%)
¸
3 years
£
4.98% (the Modified Commitment). For the purpose of
calculating the total number of shares granted in a year under
the Modified Commitment, each share of restricted stock granted
will continue to count as the equivalent of two option shares
and as mentioned above, shares cancelled or forfeited will not
be credited against the annual totals.
Management of
Compensation-Related Risk
The Compensation Committee does not believe that the
Companys compensation policies and practices for employees
are reasonably likely to have a material adverse effect on the
Company.
The Company has designed its executive compensation programs to
avoid excessive risk-taking. The following are some of the
features of the Companys executive compensation programs
designed to help the Company appropriately manage business risk:
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|
|
|
|
The Compensation Committee has oversight of all elements of
executive compensation;
|
|
|
|
Award calculations under the corporate bonus plan generally are
linear; other than the requirement that the Company achieves
minimum performance relative to pre-set financial metrics, there
are no steep payout curves or disproportionate increases in
compensation payout thresholds that might create incentives to
take greater risks for greater rewards;
|
|
|
|
Annual cash bonuses are paid only after the Board has reviewed
audited financial statements for the performance year;
|
|
|
|
The Companys long-term incentives are primarily based on
stock price appreciation, which is determined by how the market
values the Companys common stock;
|
|
|
|
A clawback provision is included in
Mr. Angrisanis employment agreement that entitles the
Company to recover certain performance bonus payments in the
event of certain accounting restatements due to material
non-compliance of the Company with any financial reporting
requirement. Similarly, a clawback provision is
included in each executive officers performance-based
equity agreement that entitles the Company to recover the
proceeds from the sale of the equity in the event of any such
accounting restatement;
|
|
|
|
The Companys finance, accounting, legal, and human
resources departments collaborate on bonus plan design so that
risk may be identified from a broad range of
perspectives; and
|
|
|
|
Certain of the Companys executive officers are required to
maintain an investment in the Companys common stock over a
period of time that is equivalent to their respective annual
salaries, ensuring an alignment with stockholder interests.
|
28
Tax and
Accounting Considerations
Section 162(m) of the IRC generally denies publicly-held
corporations a federal income tax deduction for compensation
exceeding $1,000,000 paid to the Chief Executive Officer or any
of the four other highest paid executive officers, excluding
performance-based compensation. Through June 30, 2011, this
provision has not limited the Companys ability to deduct
executive compensation. The Compensation Committee will continue
to monitor the potential impact of Section 162(m) on the
Companys ability to deduct executive compensation. The
Incentive Plan has been designed, and are intended to be
administered, in a manner that will enable the Company to deduct
compensation attributable to options and certain other awards
thereunder, without regard to the deduction limitation
established by Section 162(m).
Section 409A of the IRC generally changed the tax rules
that affect most forms of deferred compensation that were not
earned and vested prior to 2005, and imposed an additional tax
on certain forms of deferred compensation. The Committee takes
Section 409A into account in determining the form and
timing of compensation paid to the Companys executive
officers, and additional taxes under Section 409A are
generally not applicable to the compensation provided by the
Company.
Sections 280G and 4999 of the IRC limit the Companys
ability to take a tax deduction for certain excess
parachute payments (as defined in Sections 280G and
4999) and impose excise taxes on each executive officer
that receives excess parachute payments in
connection with his or her severance from the Company in
connection with a change in control. The Compensation Committee
considers the adverse tax liabilities imposed by
Sections 280G and 4999, as well as other competitive
factors, in structuring certain post-termination compensation
payable to the Companys NEOs. The Company does not provide
excess parachute payment protection to any of the
currently employed NEOs.
The Company expenses stock option and restricted stock grants in
accordance with the FASB guidance for stock-based compensation.
More information regarding the application of the FASB guidance
may be found in Note 14 to the Companys audited
financial statements included in the Companys Annual
Report on
Form 10-K
for the fiscal year ended June 30, 2011.
29
COMPENSATION OF
DIRECTORS AND EXECUTIVE OFFICERS
Named Executive
Officers
Information in this section is provided for
(i) Mr. Angrisani, our Interim Chief Executive
Officer, (ii) Mr. Narowski, our Interim Chief
Financial Officer, (iii) Mr. de Vere, our President,
U.S. Business Groups, (iv) Mr. Levin, our
Executive Vice President, Chief Administrative Officer, General
Counsel and Corporate Secretary, (v) Ms. Till, our
former President and Chief Executive Officer,
(vi) Mr. Bhalla, our former Executive Vice President,
Chief Financial Officer and Treasurer, and (v) two
individuals, Mr. Micali, our former Global Executive Vice
President, Technology, Operations and Panel, and
Mr. Salvoni, our former President, International, each of
whom would have been among the three most highly compensated
executive officers had they been serving at the end of fiscal
2011, calculated using the methodology for determining
total compensation provided by the SEC
(collectively, the NEOs). Ms. Till and
Messrs. Bhalla, Micali and Salvoni departed from the
Company effective June 7, 2011, June 13, 2011,
June 24, 2011 and February 4, 2011, respectively.
The age and business experience of each of the currently
employed NEOs, as well as information regarding each of the
other currently employed executive officers of the Company, are
set forth in the Companys Annual Report on
Form 10-K
filed with the SEC for the fiscal year ended June 30, 2011.
Summary
Compensation Table
The following table and accompanying footnotes provide
information regarding compensation of the NEOs for fiscal years
2009, 2010 and 2011:
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|
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|
Non-Equity
|
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Incentive
|
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|
|
|
|
|
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Stock
|
|
Option
|
|
Plan
|
|
All Other
|
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|
|
|
|
|
Salary
|
|
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
|
Name and Principal Position
|
|
Year
|
|
($)(1)(2)
|
|
Bonus($)
|
|
($)(3)
|
|
($)(4)
|
|
($)
|
|
($)(5)
|
|
Total($)
|
|
Al Angrisani
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interim Chief Executive Officer
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
350,000
|
|
|
|
729,981
|
|
|
|
|
|
|
|
27,500
|
(18)
|
|
|
1,107,481
|
|
Kimberly Till
|
|
|
2009
|
|
|
|
390,000
|
|
|
|
207,123
|
(7)
|
|
|
|
|
|
|
687,407
|
|
|
|
139,452
|
(6)
|
|
|
35,506
|
(10)
|
|
|
1,459,488
|
|
Former President and
|
|
|
2010
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,802
|
|
|
|
601,802
|
|
Chief Executive Officer
|
|
|
2011
|
|
|
|
593,077
|
|
|
|
|
|
|
|
|
|
|
|
12,575
|
|
|
|
|
|
|
|
952,302
|
(9)
|
|
|
1,557,954
|
|
Eric W. Narowski
|
|
|
2009
|
|
|
|
172,977
|
|
|
|
3,000
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600
|
|
|
|
176,577
|
|
Interim Chief Financial Officer,
|
|
|
2010
|
|
|
|
179,788
|
|
|
|
24,515
|
(12)(13)
|
|
|
|
|
|
|
6,940
|
|
|
|
|
|
|
|
|
|
|
|
211,243
|
|
Senior Vice President,
|
|
|
2011
|
|
|
|
190,038
|
|
|
|
13,385
|
(12)
|
|
|
|
|
|
|
103,906
|
|
|
|
|
|
|
|
|
|
|
|
307,329
|
|
Global Controller and Principal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pavan Bhalla
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Executive Vice President,
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer and Treasurer
|
|
|
2011
|
|
|
|
206,462
|
|
|
|
|
|
|
|
|
|
|
|
215,600
|
|
|
|
|
|
|
|
142,897
|
(9)
|
|
|
564,959
|
|
Michael de Vere
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President, U.S. Business Groups
|
|
|
2010
|
|
|
|
161,961
|
|
|
|
5,530
|
(11)
|
|
|
|
|
|
|
29,120
|
|
|
|
|
|
|
|
|
|
|
|
196,611
|
|
|
|
|
2011
|
|
|
|
255,846
|
|
|
|
|
|
|
|
|
|
|
|
195,682
|
|
|
|
|
|
|
|
|
|
|
|
451,528
|
|
Marc H. Levin
|
|
|
2009
|
|
|
|
38,365
|
|
|
|
20,400
|
(8)
|
|
|
|
|
|
|
12,595
|
|
|
|
|
|
|
|
|
|
|
|
71,360
|
|
Executive Vice President, Chief
|
|
|
2010
|
|
|
|
237,308
|
|
|
|
18,106
|
(14)
|
|
|
|
|
|
|
14,560
|
|
|
|
|
|
|
|
|
|
|
|
269,974
|
|
Administrative Officer, General
|
|
|
2011
|
|
|
|
265,577
|
|
|
|
|
|
|
|
|
|
|
|
137,117
|
|
|
|
|
|
|
|
|
|
|
|
402,694
|
|
Counsel and Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enzo J. Micali
|
|
|
2009
|
|
|
|
61,269
|
|
|
|
30,065
|
(7)
|
|
|
|
|
|
|
45,800
|
|
|
|
|
|
|
|
|
|
|
|
137,134
|
|
Former Global Executive
|
|
|
2010
|
|
|
|
295,000
|
|
|
|
5,000
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
Vice President, Technology,
|
|
|
2011
|
|
|
|
306,346
|
|
|
|
|
|
|
|
|
|
|
|
12,575
|
|
|
|
|
|
|
|
190,814
|
(9)
|
|
|
509,735
|
|
Operations and Panel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Salvoni
|
|
|
2009
|
|
|
|
35,136
|
|
|
|
|
|
|
|
|
|
|
|
14,885
|
|
|
|
|
|
|
|
2,193
|
(17)
|
|
|
52,214
|
|
Former President, International(15)
|
|
|
2010
|
|
|
|
284,159
|
|
|
|
63,808
|
(16)
|
|
|
|
|
|
|
61,030
|
|
|
|
|
|
|
|
43,094
|
(17)
|
|
|
452,091
|
|
|
|
|
2011
|
|
|
|
182,253
|
|
|
|
|
|
|
|
|
|
|
|
12,575
|
|
|
|
|
|
|
|
201,825
|
(9)(17)
|
|
|
396,653
|
|
|
|
|
(1)
|
|
Reflects base salary earned during fiscal years 2009, 2010 and
2011, and includes amounts deferred by the NEOs in accordance
with the provisions of the Companys 401(k) Plan.
|
30
|
|
|
(2)
|
|
The amounts shown reflect the salary amounts actually paid in
fiscal years 2009, 2010 and 2011, respectively. Because of the
timing of adjustments to salaries and the dates of commencement
of employment, the base salary amounts shown in the
Summary Compensation Table may differ from those
described below under Employment Agreements with Named
Executive Officers. The following salary adjustments for
the NEOs were made in fiscal years 2009, 2010 and 2011:
|
|
|
|
|
|
|
|
|
|
Salary After
|
NEO
|
|
Adjustment Date
|
|
Adjustment Date($)
|
|
Eric W. Narowski
|
|
10/1/08
|
|
174,300
|
|
|
10/27/09
|
|
183,000
|
Michael de Vere
|
|
4/5/10
|
|
210,000
|
|
|
10/1/10
|
|
230,000
|
|
|
12/13/10
|
|
255,000
|
|
|
1/3/11
|
|
275,000
|
Marc H. Levin
|
|
5/1/10
|
|
255,000
|
|
|
6/13/11
|
|
275,000
|
Robert Salvoni
|
|
10/27/09
|
|
172,165 GBP
|
|
|
4/1/10
|
|
195,000 GBP
|
|
|
|
(3)
|
|
The data presented in this column reflects the grant date fair
value. For additional information as to the assumptions made in
valuation, see Note 14 to the Companys audited
financial statements filed with the SEC in the Companys
Annual Report on
Form 10-K
for the fiscal year ended June 30, 2011. Mr. Angrisani
was the only NEO awarded stock in fiscal 2011. See the
Grants of Plan Based Awards in Fiscal 2011 table
below for information on stock granted to Mr. Angrisani in
fiscal 2011. None of the NEOs forfeited stock in fiscal 2011.
|
|
(4)
|
|
The data presented in this column reflects the grant date fair
value. For additional information as to the assumptions made in
valuation, see Note 14 to the Companys audited
financial statements filed with the SEC in the Companys
Annual Report on
Form 10-K
for the fiscal year ended June 30, 2011. Amounts reflected
above are based on the Companys accounting expense for
these awards, and do not correspond to the actual value that may
be recognized by the NEOs. See the Grants of Plan Based
Awards in Fiscal 2011 table below for information on
options granted to NEOs in fiscal 2011. Forfeitures of option
awards by NEOs during fiscal 2011 were as follows:
|
|
|
|
NEO
|
|
Option Award Forfeiture
|
|
Kimberly Till
|
|
843,750
|
Pavan Bhalla
|
|
400,000
|
Enzo J. Micali
|
|
120,833
|
Robert Salvoni
|
|
147,917
|
31
|
|
|
(5)
|
|
Includes the following 401(k) matching contributions (in the
case of Mr. Salvoni, pension fund matching contributions
that were consistent with those provided to all U.K. employees)
and life insurance premiums (for coverage in addition to that
provided to all Company employees) for the applicable fiscal
year. For a description of amounts included in Other
below, see footnote (18) related to Mr. Angrisani,
footnotes (9) and (10) related to Ms. Till,
footnote (9) related to Messrs. Bhalla and Micali, and
footnotes (9) and (17) related to Mr. Salvoni.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
|
|
|
|
|
|
|
401(k) Match ($)
|
|
Premium ($)
|
|
Other ($)
|
|
Al Angrisani
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
27,500
|
|
Kimberly Till
|
|
|
2009
|
|
|
|
|
|
|
|
1,802
|
|
|
|
33,704
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
1,802
|
|
|
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
1,802
|
|
|
|
950,500
|
|
Eric W. Narowski
|
|
|
2009
|
|
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pavan Bhalla
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
142,897
|
|
Michael de Vere
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc H. Levin
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enzo J. Micali
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
190,814
|
|
Robert Salvoni
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
2,193
|
|
|
|
|
2010
|
|
|
|
27,364
|
|
|
|
|
|
|
|
15,730
|
|
|
|
|
2011
|
|
|
|
40,534
|
|
|
|
|
|
|
|
161,291
|
|
|
|
|
(6)
|
|
Non-equity incentive plan compensation was based upon the
Compensation Committees assessment of performance against
individual management objectives and was pro-rated for the
portion of fiscal 2009 during which Ms. Till was actually
employed.
|
|
(7)
|
|
Annual bonus amount was contractually guaranteed and pro-rated
for the portion of fiscal 2009 during which the NEO was actually
employed.
|
|
(8)
|
|
Includes a $17,400 contractually guaranteed and pro-rated annual
bonus for the portion of fiscal 2009 during which Mr. Levin
was actually employed and a $3,000 discretionary cash bonus
awarded by the Compensation Committee to Mr. Levin.
|
|
(9)
|
|
Represents a post-employment payment obligation due to the NEO
in accordance with his or her separation agreement with the
Company, as more fully described below under Employment
Agreements with Named Executive Officers.
|
|
(10)
|
|
Includes a $33,704 reimbursement of legal fees in connection
with the negotiation of Ms. Tills employment
agreement.
|
|
(11)
|
|
Represents a discretionary cash bonus awarded by the
Compensation Committee to the NEO.
|
|
(12)
|
|
Includes a $3,000 monthly bonus payment from
November 20, 2009 through October 9, 2010 and a
$3,500 monthly bonus payment from June 14, 2011
through June 30, 2011 for Mr. Narowskis service
as Interim Chief Financial Officer.
|
|
(13)
|
|
Includes a discretionary cash bonus awarded by the Compensation
Committee in the amount of $2,500.
|
|
(14)
|
|
Includes a discretionary cash bonus awarded by the Compensation
Committee in the amount of $5,000 and a $4,000 monthly
bonus payment from January 1, 2010 through April 12,
2010 for Mr. Levins service as Interim Head of Human
Resources.
|
32
|
|
|
(15)
|
|
Payments under Mr. Salvonis employment agreement are
denominated in British Pounds. All amounts reflected in the
Summary Compensation Table are in U.S. Dollars,
based upon the average exchange rate between U.S. Dollars and
British Pounds for the applicable period.
|
|
(16)
|
|
Includes a contractually guaranteed bonus payment of 32,000 GBP
for fiscal 2010 and a 2,000 GBP monthly bonus payment from
November 2009 through March 2010 in recognition of the
significant time and effort expended by Mr. Salvoni in
working to improve the financial performance of the
Companys Asia operations.
|
|
(17)
|
|
Includes a car allowance of 10,000 GBP per annum, payable on a
monthly basis, for the applicable fiscal year.
|
|
(18)
|
|
Includes a $7,500 reimbursement of legal fees in connection with
the negotiation of Mr. Angrisanis employment
agreement and fees paid to Angrisani Turnarounds pursuant to the
agreement between the Company and Angrisani Turnarounds under
which Angrisani Turnarounds agreed to make Mr. Angrisani
available to serve as the Companys Interim Chief Executive
Officer, as more fully described below under Transactions
with Related Persons.
|
The Company has entered into employment agreements with certain
of its executive officers, including each of the NEOs other than
Mr. Narowski, who entered into a change in control
agreement with the Company, and Messrs. de Vere, Levin and
Micali, who each entered into an employment letter agreement
with the Company. In certain cases, the Board has approved
modifications to NEO compensation for retentive purposes and in
connection with promotions and assumptions of additional
responsibilities. The material terms of such arrangements are
discussed below under Employment Agreements with Named
Executive Officers and, with respect to currently employed
NEOs, in Potential Payments upon Termination or Change in
Control. For further discussion regarding the
determination of base salary and incentive compensation within
the context of total compensation, see Compensation
Discussion and Analysis
Mix of Types
of Compensation above.
Grants of Plan
Based Awards in Fiscal 2011
The following table and accompanying footnotes provide
information regarding plan based awards to the NEOs in fiscal
2011:
Grants of Plan
Based Awards in Fiscal 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
Option
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Awards:
|
|
|
|
Fair Value
|
|
|
|
|
Estimated Possible Payouts
|
|
Estimate Future Payouts
|
|
Awards:
|
|
Number of
|
|
Exercise or
|
|
of Stock
|
|
|
|
|
Under Non-Equity
|
|
Under Equity
|
|
Number of
|
|
Securities
|
|
Base Price
|
|
And
|
|
|
|
|
Plan Incentive Awards
|
|
Plan Incentive Awards
|
|
Shares of
|
|
Underlying
|
|
of Option
|
|
Option
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Stock
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($/sh)(1)
|
|
($)(2)
|
|
Al Angrisani
|
|
|
6/7/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
(6)
|
|
|
|
|
|
|
|
|
|
|
350,000
|
|
|
|
|
6/7/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(7)
|
|
|
0.70
|
|
|
|
45,000
|
|
|
|
|
6/7/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
330,000
|
(4)
|
|
|
1,650,000
|
(4)
|
|
|
1,650,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
0.70
|
|
|
|
684,981
|
|
Kimberly Till
|
|
|
8/26/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(8)
|
|
|
0.80
|
|
|
|
12,575
|
|
|
|
|
8/30/10
|
|
|
|
1
|
|
|
|
600,000
|
(3)
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric W. Narowski
|
|
|
8/26/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(8)
|
|
|
0.80
|
|
|
|
12,575
|
|
|
|
|
8/30/10
|
|
|
|
1
|
|
|
|
54,900
|
(3)
|
|
|
54,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/7/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,000
|
(5)
|
|
|
220,000
|
(5)
|
|
|
220,000
|
(5)
|
|
|
|
|
|
|
|
|
|
|
0.70
|
|
|
|
91,331
|
|
Pavan Bhalla
|
|
|
10/4/10
|
|
|
|
1
|
|
|
|
152,500
|
(3)
|
|
|
152,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
(8)
|
|
|
0.85
|
|
|
|
215,600
|
|
Michael de Vere
|
|
|
8/26/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(8)
|
|
|
0.80
|
|
|
|
12,575
|
|
|
|
|
1/3/11
|
|
|
|
1
|
|
|
|
110,000
|
(3)
|
|
|
110,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/15/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,000
|
(8)
|
|
|
1.06
|
|
|
|
58,565
|
|
|
|
|
6/7/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
(5)
|
|
|
300,000
|
(5)
|
|
|
300,000
|
(5)
|
|
|
|
|
|
|
|
|
|
|
0.70
|
|
|
|
124,542
|
|
Marc H. Levin
|
|
|
8/26/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(8)
|
|
|
0.80
|
|
|
|
12,575
|
|
|
|
|
8/30/10
|
|
|
|
1
|
|
|
|
102,000
|
(3)
|
|
|
102,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/7/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
(5)
|
|
|
300,000
|
(5)
|
|
|
300,000
|
(5)
|
|
|
|
|
|
|
|
|
|
|
0.70
|
|
|
|
124,542
|
|
Enzo J. Micali
|
|
|
8/26/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(8)
|
|
|
0.80
|
|
|
|
12,575
|
|
|
|
|
8/30/10
|
|
|
|
1
|
|
|
|
118,000
|
(3)
|
|
|
118,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Salvoni
|
|
|
8/26/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(8)
|
|
|
0.80
|
|
|
|
12,575
|
|
|
|
|
8/30/10
|
|
|
|
1
|
|
|
|
78,000 GBP
|
(3)
|
|
|
78,000 GBP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
|
|
|
(1)
|
|
Reflects exercise price for stock options granted, which was the
closing market price of the Companys stock on the grant
date.
|
|
(2)
|
|
Reflects full grant date fair value of the restricted stock and
stock options granted. For restricted stock, fair value is
calculated using the closing market price of the Companys
stock on the date of grant. For stock options, fair value is
calculated using the Black-Scholes value on the date of grant.
For additional information as to the assumptions made in
valuation, see Note 14 to the Companys audited
financial statements filed with the SEC in the Companys
Annual Report on
Form 10-K
for the fiscal year ended June 30, 2011.
|
|
(3)
|
|
Target non-equity incentive plan awards applicable to fiscal
2011 are set forth in Ms. Tills and
Messrs. Bhallas and Salvonis employment
agreements, and Messrs. de Veres and Micalis
employment letter agreements. The targets for Mr. Narowski
and Mr. Levin were established by the Compensation
Committee for fiscal 2011. A description of the 2011 Bonus Plan
is included above in Compensation Discussion and
Analysis Implementing the Compensation
Committees Objectives Cash Bonus
Plan Linking Compensation to Performance.
|
|
(4)
|
|
Performance-based non-qualified stock options to purchase shares
of the Companys common stock were issued at fair market
value on the date of grant and are subject to, among others, the
following terms:
|
|
|
|
|
|
The options, to the extent not previously exercised, expire on
the ten-year anniversary of the grant date.
|
|
|
|
The options vest in five equal tranches if, commencing on or
after July 1, 2012, the Company has had an average closing
price for its stock during a 30 consecutive trading day period
(excluding any trading day in which the total trading volume of
the stock is less than 10,000), at or above the stock price
targets set forth below, or if the adjusted EBITDA targets set
forth below are achieved using any trailing consecutive four
fiscal quarters commencing on or after October 1, 2012.
|
|
|
|
|
|
$2.00 stock price or $16 million of adjusted EBITDA
|
|
|
|
$2.50 stock price or $23 million of adjusted EBITDA
|
|
|
|
$3.00 stock price or $26 million of adjusted EBITDA
|
|
|
|
$3.50 stock price or $28 million of adjusted EBITDA
|
|
|
|
$4.00 stock price or $30 million of adjusted EBITDA
|
|
|
|
|
|
All unvested non-qualified stock options will immediately vest
upon a change in control, provided that Mr. Angrisani is
employed at such time.
|
|
|
|
Vesting is accelerated upon the occurrence of a change in
control of the Company.
|
|
|
|
Vesting ceases if Mr. Angrisanis employment is
terminated for any reason (voluntary or involuntary).
|
|
|
|
The Company is entitled to recover an amount equal to the
proceeds from the sale of vested and exercised options in the
event of certain accounting restatements due to material
non-compliance of the Company with any financial reporting
requirement.
|
|
|
|
(5)
|
|
Performance-based non-qualified stock options to purchase shares
of the Companys common stock were issued at fair market
value on the date of grant and are subject to, among others, the
following terms:
|
|
|
|
|
|
The options, to the extent not previously exercised, expire on
the ten-year anniversary of the grant date.
|
|
|
|
The options vest in five equal tranches if, commencing on or
after June 7, 2011, the Company has had an average closing
price for its stock during a 30 consecutive trading day period
(excluding any trading day in which the total trading volume of
the stock is less than 10,000), at or above the stock price
targets set forth below, or if the adjusted EBITDA targets set
forth below are achieved using any trailing consecutive four
fiscal quarters commencing on or after June 7, 2011.
|
|
|
|
|
|
$2.00 stock price or $16 million of adjusted EBITDA
|
|
|
|
$2.50 stock price or $23 million of adjusted EBITDA
|
34
|
|
|
|
|
$3.00 stock price or $26 million of adjusted EBITDA
|
|
|
|
$3.50 stock price or $28 million of adjusted EBITDA
|
|
|
|
$4.00 stock price or $30 million of adjusted EBITDA
|
|
|
|
|
|
Vesting is accelerated upon the occurrence of a change in
control of the Company only if there is not a Complying
Assumption or, upon a Complying Assumption, the executive
officer is terminated without cause (as defined in
the applicable equity incentive agreement) by the acquirer or
leaves for good reason (as defined in the applicable
equity incentive agreement) within one year after the change in
control.
|
|
|
|
If there is a Complying Assumption, then 25% of the unvested
options vest on the later of (i) June 7, 2012 or
(ii) the occurrence of the change in control, with the
balance vesting ratably on a monthly basis beginning in July
2012 and ending in June 2015; provided, that to the extent that
the change in control occurs subsequent to any such calendar
month, then the unvested options that would have vested during
such prior calendar month(s) vest upon the change in control.
|
|
|
|
Vesting ceases if the executive officers employment is
terminated for any reason (voluntary or involuntary).
|
|
|
|
The Company is entitled to recover an amount equal to the
proceeds from the sale of vested and exercised options in the
event of certain accounting restatements due to material
non-compliance of the Company with any financial reporting
requirement.
|
|
|
|
(6)
|
|
Shares of restricted stock of the Company are subject to, among
others, the following terms:
|
|
|
|
|
|
One-thirteenth of the shares vests on the 30th day of each
month commencing on June 30, 2011.
|
|
|
|
If the Company terminates Mr. Angrisanis employment
without cause or Mr. Angrisani terminates his employment
for good reason (i) on or prior to December 31, 2011,
then one-half of the shares vest (inclusive of shares that have
vested previously), or (ii) after December 31, 2011,
then all non-vested shares vest.
|
|
|
|
Vesting ceases if Mr. Angrisanis employment is
terminated by the Company for cause or by Mr. Angrisani
without good reason.
|
|
|
|
Vesting is accelerated upon the occurrence of a change in
control of the Company.
|
|
|
|
(7)
|
|
Incentive stock options to purchase shares of the Companys
common stock were issued at fair market value on the date of
grant and are subject to, among others, the following terms:
|
|
|
|
|
|
The options, to the extent not previously exercised, expire on
the ten-year anniversary of the grant date.
|
|
|
|
The option award vests on June 30, 2013.
|
|
|
|
Vesting is accelerated upon the occurrence of a change in
control of the Company.
|
|
|
|
Vesting ceases if Mr. Angrisanis employment is
terminated for any reason (voluntary or involuntary).
|
|
|
|
(8)
|
|
Time-based non-qualified stock options to purchase shares of the
Companys common stock were issued at fair market value on
the date of the grant and are subject to, among others, the
following terms:
|
|
|
|
|
|
The options, to the extent not previously exercised, expire on
the ten-year anniversary of the grant date.
|
|
|
|
25% of each option award vests on the one-year anniversary date
of the grant, with the balance vesting ratably on a monthly
basis over the following 36 months.
|
|
|
|
Vesting is generally accelerated upon the occurrence of a change
in control of the Company only if there is not a Complying
Assumption or, upon a Complying Assumption, the executive
officer is terminated without cause (as defined in
the applicable equity incentive agreement) by the acquirer or
leaves for good reason (as defined in the applicable
equity incentive agreement) within one year after the change in
control.
|
35
|
|
|
|
|
Vesting ceases if the executive officers employment is
terminated for any reason (voluntary or involuntary), but is
accelerated upon the executive officers death or
disability following the one-year anniversary date of the grant.
|
Outstanding
Equity Awards at 2011 Fiscal Year End
The following table and accompanying footnotes provide
information regarding unexercised stock options and unvested
restricted stock awards held by our NEOs as of June 30,
2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
Market
|
|
Incentive
|
|
Plan
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
Value of
|
|
Plan
|
|
Awards:
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
Shares or
|
|
Awards:
|
|
Market
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Number
|
|
Units of
|
|
Number of
|
|
Value of
|
|
|
|
|
Number of
|
|
Number of
|
|
Securities
|
|
|
|
|
|
of Shares
|
|
Stock
|
|
Unearned
|
|
Unearned
|
|
|
|
|
Securities
|
|
Securities
|
|
Underlying
|
|
|
|
|
|
or Units
|
|
That
|
|
Shares
|
|
Shares
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Unexercised
|
|
Option
|
|
|
|
of Stock
|
|
Have
|
|
That
|
|
That
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Unearned
|
|
Exercise
|
|
Option
|
|
That
|
|
Not
|
|
Have Not
|
|
Have Not
|
|
|
|
|
Options(#)
|
|
Options(#)
|
|
Options
|
|
Price
|
|
Expiration
|
|
Have Not
|
|
Vested
|
|
Vested
|
|
Vested
|
Name
|
|
Grant Date
|
|
Exercisable
|
|
Unexercisable
|
|
(#)
|
|
($)
|
|
Date
|
|
Vested(#)
|
|
($)(6)
|
|
(#)
|
|
($)
|
|
Al Angrisani
|
|
|
7/27/04
|
|
|
|
28,450
|
(7)
|
|
|
|
|
|
|
|
|
|
|
6.27
|
|
|
|
7/26/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/7/11
|
|
|
|
|
|
|
|
100,000
|
(2)
|
|
|
1,650,000
|
(3)
|
|
|
0.70
|
|
|
|
6/6/21
|
|
|
|
461,538
|
(4)
|
|
|
392,307
|
|
|
|
|
|
|
|
|
|
Kimberly Till
|
|
|
10/21/08
|
|
|
|
581,250
|
(1)
|
|
|
|
|
|
|
|
|
|
|
1.12
|
|
|
|
8/6/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric W. Narowski
|
|
|
9/12/02
|
|
|
|
6,458
|
(1)
|
|
|
|
|
|
|
|
|
|
|
2.42
|
|
|
|
9/11/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/24/05
|
|
|
|
5,000
|
(1)
|
|
|
|
|
|
|
|
|
|
|
5.00
|
|
|
|
6/23/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/15/07
|
|
|
|
20,000
|
(1)
|
|
|
|
|
|
|
|
|
|
|
5.31
|
|
|
|
2/14/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/31/07
|
|
|
|
2,156
|
(1)
|
|
|
94
|
(1)
|
|
|
|
|
|
|
4.31
|
|
|
|
8/30/17
|
|
|
|
188
|
|
|
|
160
|
|
|
|
|
|
|
|
|
|
|
|
|
11/13/09
|
|
|
|
3,958
|
(1)
|
|
|
6,042
|
(1)
|
|
|
|
|
|
|
1.09
|
|
|
|
11/12/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/26/10
|
|
|
|
|
|
|
|
25,000
|
(1)
|
|
|
|
|
|
|
0.80
|
|
|
|
8/25/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/7/11
|
|
|
|
|
|
|
|
|
|
|
|
220,000
|
(5)
|
|
|
0.70
|
|
|
|
6/6/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pavan Bhalla
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael de Vere
|
|
|
5/15/10
|
|
|
|
16,458
|
(1)
|
|
|
23,542
|
(1)
|
|
|
|
|
|
|
1.15
|
|
|
|
5/14/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/26/10
|
|
|
|
|
|
|
|
25,000
|
(1)
|
|
|
|
|
|
|
0.80
|
|
|
|
8/25/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/15/11
|
|
|
|
|
|
|
|
85,000
|
(1)
|
|
|
|
|
|
|
1.06
|
|
|
|
2/14/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/7/11
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
(5)
|
|
|
0.70
|
|
|
|
6/6/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc H. Levin
|
|
|
5/15/09
|
|
|
|
28,646
|
(1)
|
|
|
26,354
|
(1)
|
|
|
|
|
|
|
0.38
|
|
|
|
5/14/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/15/10
|
|
|
|
5,417
|
(1)
|
|
|
14,583
|
(1)
|
|
|
|
|
|
|
1.15
|
|
|
|
5/14/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/26/10
|
|
|
|
|
|
|
|
25,000
|
(1)
|
|
|
|
|
|
|
0.80
|
|
|
|
8/25/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/7/11
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
(5)
|
|
|
0.70
|
|
|
|
6/6/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enzo J. Micali
|
|
|
5/15/09
|
|
|
|
104,167
|
(1)
|
|
|
|
|
|
|
|
|
|
|
0.38
|
|
|
|
8/23/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Salvoni
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Options vest as described in footnote (8) to the table
under Grants of Plan Based Awards in Fiscal 2011.
|
|
(2)
|
|
Options vest as described in footnote (7) to the table
under Grants of Plan Based Awards in Fiscal 2011.
|
|
(3)
|
|
Options vest as described in footnote (4) to the table
under Grants of Plan Based Awards in Fiscal 2011.
|
|
(4)
|
|
Shares vest as described in footnote (6) to the table under
Grants of Plan Based Awards in Fiscal 2011.
|
|
(5)
|
|
Options vest as described in footnote (5) to the table
under Grants of Plan Based Awards in Fiscal 2011.
|
|
(6)
|
|
Value is based on the market value of $0.85 for the
Companys common stock, the closing market price of such
common stock as reported by NASDAQ on June 30, 2011, the
last trading day of fiscal 2011.
|
|
(7)
|
|
Options fully vested upon grant.
|
36
Options Exercised
and Stock Vested in Fiscal 2011
The following table provides information with regard to the
amounts paid or received by the NEOs during fiscal 2011 as a
result of the exercise of stock options or the vesting of
restricted stock awards.
Fiscal 2011
Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
|
|
|
Acquired on
|
|
Value Realized on
|
|
Number of Shares
|
|
Value Realized on
|
Name
|
|
Exercise(#)(1)
|
|
Exercise($)(2)
|
|
Acquired on Vesting(#)(3)
|
|
Vesting($)(4)
|
|
Al Angrisani
|
|
|
|
|
|
|
|
|
|
|
38,462
|
|
|
|
32,693
|
|
Kimberly Till
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric W. Narowski
|
|
|
|
|
|
|
|
|
|
|
188
|
|
|
|
173
|
|
Pavan Bhalla
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael de Vere
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc H. Levin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enzo J. Micali
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Salvoni
|
|
|
27,083
|
|
|
|
16,791
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects the number of stock options exercised during fiscal
2011.
|
|
(2)
|
|
Reflects the market value at the time of exercise of the stock
options less the exercise price paid.
|
|
(3)
|
|
Reflects the shares of common stock acquired upon vesting during
fiscal 2011.
|
|
(4)
|
|
Reflects the market value of the shares on the respective
vesting dates.
|
Employment
Agreements with Named Executive Officers
Al Angrisani.
Mr. Angrisani serves as our
Interim Chief Executive Officer. Mr. Angrisani entered into
an employment agreement with the Company, effective June 7,
2011 (the Angrisani Agreement). The material terms
of the Angrisani Agreement include, among other things:
|
|
|
|
|
Service as Interim Chief Executive Officer of the Company
continuing through and including the earliest to occur of
(i) June 30, 2012, (ii) the date on which
Mr. Angrisani dies, and (iii) the date on which either
the Company or Mr. Angrisani terminates
Mr. Angrisanis employment for any reason (the
Interim Period).
|
|
|
|
Upon the mutual agreement of Mr. Angrisani and the Company,
service as President and Chief Executive Officer of the Company
for the period commencing July 1, 2012 and continuing
through and including the earliest to occur of
(i) June 30, 2013, (ii) the date on which
Mr. Angrisani dies, and (iii) the date on which either
the Company or Mr. Angrisani terminates
Mr. Angrisanis employment for any reason (the
Non-Interim Period).
|
|
|
|
No base salary during the Interim Period and, if applicable, an
annual base salary of $1.00 during the Non-Interim Period.
|
|
|
|
Target performance bonuses for fiscal 2012 and, if applicable,
fiscal 2013, of $250,000 and $400,000, respectively, based upon
performance standards established by the Compensation Committee
relating to financial targets and achievement of individual
management objectives.
|
|
|
|
Certain non-competition, non-solicitation and confidentiality
covenants.
|
|
|
|
Vacation, expense reimbursement and other employee benefits
commensurate with those provided by the Company to its senior
executives generally.
|
|
|
|
Reimbursement of reasonable expenses incurred in the negotiation
of the Angrisani Agreement, subject to a maximum reimbursement
of $7,500.
|
37
|
|
|
|
|
The Companys recovery of certain amounts received by
Mr. Angrisani in the event of certain accounting
restatements due to material non-compliance of the Company with
any financial reporting requirement.
|
The Angrisani Agreement may be terminated by either the Company
or Mr. Angrisani with or without cause upon notice to the
other. The effect of termination of Mr. Angrisani under
various circumstances, including with cause, without cause, with
good reason, without good reason, on death or disability, and in
the case of a change in control, is detailed below under
Potential Payments upon Termination or Change in
Control. For purposes of the Angrisani Agreement,
(a) cause includes: (i) willful failure to
substantially perform duties after demand for substantial
performance after notice and failure to cure; (ii) willful
conduct that is injurious to the Company; (iii) conviction
or plea of guilty or nolo contendere to a felony or to any other
crime which involves moral turpitude, or if not involving moral
turpitude, is injurious to the Company or its subsidiaries;
(iv) material violations of certain Company polices after
notice and, in certain circumstances, failure to cure; and
(v) material breach of any material provision of the
Angrisani Agreement by Mr. Angrisani after notice of such
failure; and (b) good reason includes:
(i) material breach of the Angrisani Agreement by the
Company after notice and failure to cure; (ii) material
reduction in the general nature of Mr. Angrisanis
duties or authority without Mr. Angrisanis consent;
(iii) relocation of the Companys principal executive
office to a location more than 100 miles from the
Companys principal executive office in New York City;
(iv) appointment of a chief financial officer or chief
operating officer without Mr. Angrisanis consent; and
(v) failure of any successor in interest to the Company to
be bound by the terms of the Angrisani Agreement.
Kimberly Till.
Ms. Till served as our
President and Chief Executive Officer from October 21, 2008
through June 7, 2011. Ms. Till entered into an
employment agreement with the Company, effective
October 21, 2008 and amended December 20, 2010 (the
Till Agreement). The material terms of the Till
Agreement included, among other things:
|
|
|
|
|
Base salary of $600,000 per year, subject to increase as
determined by the Compensation Committee from time to time.
|
|
|
|
An annual performance bonus set by the Compensation Committee,
based upon performance standards established relating to
financial targets and achievement of individual management
objectives, with a target bonus at least equal to her annual
base salary to be established by the Compensation Committee;
provided, however, that for fiscal 2009 such objectives were
established on December 16, 2008 and a minimum bonus of
$207,123 was guaranteed.
|
|
|
|
Certain non-competition, non-solicitation and confidentiality
covenants.
|
|
|
|
Vacation, expense reimbursement and other employee benefits
commensurate with those provided by the Company to its senior
executives generally.
|
|
|
|
$600,000 of supplemental term life insurance, in addition to
Company paid term life insurance benefits provided to all
executive officers. The annual premium paid is set forth above
in footnote 5 to the Summary Compensation Table.
|
|
|
|
Reimbursement of reasonable expenses incurred in the negotiation
of the Till Agreement and related stock option agreements.
|
|
|
|
Gross-ups
of
certain change in control payments to the extent that those
payments are treated as taxable income to Ms. Till.
|
|
|
|
The Companys recovery of certain amounts received by
Ms. Till in the event of certain accounting restatements
due to material non-compliance of the Company with any financial
reporting requirement.
|
|
|
|
Certain payments if Ms. Tills employment is
terminated under various circumstances, including with cause,
without cause, with good reason, without good reason, upon death
or disability, and in the case of a change in control.
|
38
The Till Agreement required the Nominating and Governance
Committee to nominate and recommend Ms. Till for election
as a director at each annual meeting of stockholders coinciding
with the expiration of her term as a director. Ms. Till
resigned from the Board on the date on which the Till Agreement
terminated in accordance with the terms thereof.
Effective June 16, 2011, the Company entered into a
separation letter agreement with Ms. Till (the Till
Separation Agreement), pursuant to which the Company
agreed to pay Ms. Till (a) $900,000 (less applicable
taxes), payable as follows: (i) in December 2011, a payment
of $120,000; (ii) commencing in January 2012, nineteen
equal monthly installments of $40,000; and (iii) in August
2013, a single final installment of $20,000; and (b) in
December 2011, the cash equivalent of twelve months of the
Companys share of health and medical premiums at her
employee rate at the time of separation. The Till Separation
Agreement also provides for a customary release of claims by
Ms. Till, mutual non-disparagement obligations, and the
survival of certain terms of the Till Agreement, including her
confidentiality, non-solicitation, and non-competition
obligations contained therein.
Eric W. Narowski.
Mr. Narowski serves as
our Interim Chief Financial Officer, Senior Vice President,
Global Controller and Principal Accounting Officer.
Mr. Narowski has not entered into an employment agreement
with the Company. Mr. Narowskis current annual base
salary is $183,000 and, in the discretion of the Compensation
Committee, he is eligible for an annual performance bonus, with
a target bonus under the corporate bonus plan established
annually by the Compensation Committee. Mr. Narowskis
target bonus for fiscal 2011 was established at $54,900. On
June 14, 2011, the Compensation Committee approved a
monthly bonus of $3,500, payable in bi-weekly installments, for
Mr. Narowski while he serves as Interim Chief Financial
Officer. Similarly, Mr. Narowski received a monthly bonus
of $3,000, payable in bi-weekly installments, for his service as
Interim Chief Financial Officer from November 20, 2009
through October 10, 2010.
Mr. Narowski entered into a change in control agreement
with the Company in 2007 (the Narowski Change in Control
Agreement), which provides for, among other things,
severance payments in certain circumstances upon a change in
control, as detailed below under Potential Payments upon
Termination or Change in Control. Mr. Narowski is
subject to certain non-competition, non-solicitation and
confidentiality covenants contained in the Narowski Change in
Control Agreement, and the Companys post-termination
payment obligations are, in part, in consideration of such
covenants. Except in connection with a change in control of the
Company, in which case the Narowski Change in Control Agreement
will govern the payment of severance, if the Company terminates
Mr. Narowskis employment without cause,
he is entitled to continued payment of his base salary and
monthly bonus for his service as Interim Chief Financial Officer
for six months in accordance with the Companys regular
payroll practices.
Pavan Bhalla.
Mr. Bhalla served as our
Executive Vice President, Chief Financial Officer and Treasurer
from October 11, 2010 through June 13, 2011.
Mr. Bhalla entered into an employment agreement with the
Company, effective October 11, 2010 and amended
December 20, 2010 (the Bhalla Agreement). The
material terms of the Bhalla Agreement included, among other
things:
|
|
|
|
|
Base salary of $305,000 per year, subject to adjustment as
determined by the Compensation Committee from time to time.
|
|
|
|
An annual performance bonus set by the Compensation Committee,
based upon performance standards established relating to
financial targets and achievement of individual performance
objectives, with an initial target bonus equal to 50% of his
annual base salary.
|
|
|
|
Certain non-competition, non-solicitation and confidentiality
covenants.
|
|
|
|
Vacation, expense reimbursement and other employee benefits
commensurate with those provided by the Company to its senior
executives generally.
|
|
|
|
The Companys recovery of certain performance bonus
payments received by Mr. Bhalla in the event of certain
accounting restatements due to material non-compliance of the
Company with financial reporting requirements.
|
39
|
|
|
|
|
Certain payments if Mr. Bhallas employment is
terminated under various circumstances, including with cause,
without cause, with good reason, without good reason, upon death
or disability, and in the case of a change in control.
|
Effective June 20, 2011, the Company entered into a
separation letter agreement with Mr. Bhalla (the
Bhalla Separation Agreement), pursuant to which the
Company agreed to pay Mr. Bhalla (a) $127,083.33 (less
applicable taxes), payable in a lump sum in December 2011, and
(b) in December 2011, the cash equivalent of eight months
of the Companys share of health and medical premiums at
his employee rate at the time of separation. The Bhalla
Separation Agreement also provides for a customary release of
claims by Mr. Bhalla, mutual non-disparagement obligations,
and the survival of certain terms of the Bhalla Agreement,
including his confidentiality, non-solicitation, and
non-competition obligations contained therein.
Michael de Vere.
Mr. de Vere serves as our
President, U.S. Business Groups. Mr. de Vere entered into
an employment letter agreement with the Company, effective
January 3, 2011 (the de Vere Agreement). The
material terms of the de Vere Agreement includes, among other
things:
|
|
|
|
|
Base salary of $275,000 per year, subject to adjustment as
determined by the Compensation Committee from time to time.
|
|
|
|
An annual performance bonus set by the Compensation Committee,
based upon performance standards established relating to
financial targets and achievement of individual management
objectives, with an initial target bonus equal to 40% of his
annual base salary.
|
|
|
|
A $30,000 one-time bonus if the U.S. Healthcare Sector
meets or exceeds its budgeted revenue and operating income
through the first three quarters of fiscal 2011 (on a cumulative
basis).
|
|
|
|
Vacation, expense reimbursement and other employee benefits
commensurate with those provided by the Company to its senior
executives generally.
|
The de Vere Agreement may be terminated by either the Company or
Mr. de Vere with or without cause upon notice to the other. The
effect of termination of Mr. de Vere under various
circumstances, including with cause, without cause, with good
reason, without good reason, on death or disability, and in the
case of a change in control, is detailed below under
Potential Payments upon Termination or Change in
Control. For purposes of the de Vere Agreement,
cause includes: (i) failure to perform duties
after demand for substantial performance and Mr. de Veres
failure to cure such non-performance; (ii) willful conduct
with regard to the Company or Mr. de Veres duties that is
materially injurious to the Company or its subsidiaries;
(iii) conviction or plea of guilty or nolo contendere to a
crime which involves moral turpitude or, if not including moral
turpitude, arises from an act that is materially and
demonstrably injurious to the Company or any of its
subsidiaries, or conviction or plea of guilty or nolo contendere
to a felony; and (iv) willful and material violation of the
written policies of the Company after notice and, in certain
circumstances, failure to cure.
Marc H. Levin.
Mr. Levin serves as our
Executive Vice President, Chief Administrative Officer, General
Counsel and Corporate Secretary. Mr. Levin entered into an
employment letter agreement with the Company, effective
April 1, 2009 (the Levin Agreement). The
material terms of the Levin Agreement includes, among other
things:
|
|
|
|
|
Base salary of $235,000 per year, subject to adjustment as
determined by the Compensation Committee from time to time.
|
|
|
|
An annual performance bonus set by the Compensation Committee,
based upon performance standards established relating to
financial targets and achievement of individual management
objectives, with a target bonus for fiscal 2009 equal to
$70,000; provided, however, Mr. Levin was guaranteed a
minimum bonus of $17,400 for fiscal 2009.
|
|
|
|
Vacation, expense reimbursement and other employee benefits
commensurate with those provided by the Company to its senior
executives generally.
|
40
|
|
|
|
|
Certain payments if Mr. Levins employment is
terminated under various circumstances, including with cause,
without cause, with good reason, without good reason, and upon
death or disability, as detailed below under Potential
Payments upon Termination or Change in Control.
|
On April 27, 2010, the Compensation Committee approved an
increase in Mr. Levins annual base salary from
$235,000 to $255,000, effective May 1, 2010, and an
increase to his target annual performance bonus from 30% to 40%
of his annual base salary in connection with his promotion to
Executive Vice President, General Counsel and Corporate
Secretary. Mr. Levin received a monthly bonus of $4,000,
payable in bi-weekly installments, for his service as Interim
Head of Human Resources from January 1, 2010 to
April 12, 2010. On June 14, 2011, the Compensation
Committee approved an increase in Mr. Levins annual
base salary from $255,000 to $275,000, effective June 15,
2011, in connection with his promotion to Executive Vice
President, Chief Administrative Officer, General Counsel and
Corporate Secretary.
Enzo J. Micali.
Mr. Micali served as our
Global Executive Vice President, Technology, Operations and
Panel from March 31, 2009 through June 24, 2011.
Mr. Micali entered into an employment letter agreement with
the Company, effective March 31, 2009 (the Micali
Agreement). The material terms of the Micali Agreement
included, among other things:
|
|
|
|
|
Base salary of $295,000 per year, subject to adjustment as
determined by the Compensation Committee from time to time.
|
|
|
|
An annual performance bonus set by the Compensation Committee,
based upon performance standards established relating to
financial targets and achievement of individual management
objectives, with an initial target bonus equal to 40% of his
annual base salary; provided, however, Mr. Micali was
guaranteed a minimum bonus of $30,065 for fiscal 2009.
|
|
|
|
Vacation, expense reimbursement and other employee benefits
commensurate with those provided by the Company to its senior
executives generally.
|
|
|
|
Certain payments if Mr. Micalis employment is
terminated under various circumstances, including with cause,
without cause, with good reason, without good reason, upon death
or disability, and in the case of a change in control.
|
Effective July 1, 2011, the Company entered into a
separation letter agreement with Mr. Micali (the
Micali Separation Agreement), pursuant to which the
parties agreed that in connection with his departure from the
Company, Mr. Micali will receive his bi-weekly salary and
the cash equivalent of the Companys share of his health
and medical premiums at his employee rate at the time of
separation through the month of January 2012, in the same manner
and frequency as he was compensated prior to his departure from
the Company. The Micali Separation Agreement also provides for a
customary release of claims by Mr. Micali, mutual
non-disparagement obligations, and the survival of certain terms
of the Micali Agreement.
Robert Salvoni.
Mr. Salvoni served as our
President, International from May 15, 2009 through
February 4, 2011. Mr. Salvoni entered into a contract
of employment and an employment letter agreement, each effective
May 15, 2009 (together, the Salvoni Agreement).
The material terms of the Salvoni Agreement included, among
other things:
|
|
|
|
|
Base salary of 160,000 GBP per year, subject to adjustment as
determined by the Compensation Committee from time to time.
|
|
|
|
An annual performance bonus set by the Compensation Committee,
based upon performance standards established relating to
financial targets and achievement of individual performance
objectives, with an initial target bonus equal to 40% of his
annual base salary; provided, however, Mr. Salvoni was
guaranteed 50% of his annual performance bonus for fiscal 2010.
|
|
|
|
A car allowance of 10,000 GBP per annum, payable on a monthly
basis, which may be terminated at any time in the Companys
discretion.
|
41
|
|
|
|
|
Reimbursement of up to a maximum of 500 GBP in legal fees in
connection with the negotiation of the Salvoni Agreement.
|
|
|
|
Vacation, expense reimbursement and other employee benefits
commensurate with those provided by the Company to its senior
executives generally.
|
On October 27, 2009, the Compensation Committee approved an
increase in Mr. Salvonis annual base salary from
160,000 GBP to 172,165 GBP, effective November 1, 2009, in
recognition of his additional responsibilities in managing the
Companys Asia operations. On March 2, 2010, the
Compensation Committee approved a monthly bonus of 2,000 GBP for
Mr. Salvoni, with retroactive effect to November 2009 and
ending in March 2010, in recognition of the significant time and
effort expended by him in working to improve the financial
performance of the Companys Asia operations. On
April 3, 2010, the Compensation Committee approved an
increase in Mr. Salvonis annual base salary from
172,165 GBP to 195,000 GBP, with retroactive effect to
April 1, 2010, in recognition of his additional
responsibilities in managing all of the Companys
international operations.
Effective February 4, 2011, the Company entered into a
separation letter agreement with Mr. Salvoni (the
Salvoni Separation Agreement), pursuant to which the
Company paid him 112,250 GBP between February and June 2011,
14,625 GBP of which was paid into his pension fund and 82,250
GBP of which was subject to basic tax. The Salvoni Separation
Agreement also provides for the survival of certain terms of the
Salvoni Agreement.
Potential
Payments upon Termination or Change in Control
Pursuant to agreements with the NEOs, the Company is obligated
to make certain payments to the applicable executive officer
upon termination of employment, including without limitation by
reason of death or disability, or upon a change in control of
the Company. Such obligations are summarized in the table and
accompanying footnotes below for each covered event for each NEO
employed by the Company on June 30, 2011.
|
|
|
|
|
|
|
|
|
Post-Termination Payment Summary(1)
|
Event
|
|
Al Angrisani
|
|
Eric W. Narowski
|
|
Michael de Vere
|
|
Marc H. Levin
|
|
Termination
Without Cause
by Company or
With Good
Reason by
NEO(2)(3)(4)(5)(6)
|
|
(a) Certain Stock Awards Vest (7)
(b) Stock Options Cease Vesting
Total
(9): $212,500 comprised of (a)
|
|
(a) 6 Months Base Salary (8)(10)
(b) Stock Options and Awards Cease Vesting Total
Total
(9): $112,500 comprised of (a)
|
|
(a) 7.5 Months Base Salary (8)
(b) Stock Options Cease Vesting
Total
(9): $171,875 comprised of (a)
|
|
(a) 9 Months
Base Salary (8)
(b) Health Benefits 9 months (8)
(c) Stock Options Cease Vesting
Total
(9): $219,714, comprised of:
(a) $206,250, and
(c) $13,464
|
|
|
|
|
|
|
|
|
|
Termination
With Cause by
Company or by
NEO Without
Good
Reason(2)(3)(4)(5)
|
|
(a) Stock Options and Stock Awards Cease Vesting
Total
(9): $32,692
|
|
(a) Stock Options and Stock Awards Cease Vesting
Total
(9): $0
|
|
(a) Stock Options Cease Vesting
Total
(9): $0
|
|
(a) Stock Options Cease Vesting
Total
(9): $13,464
|
42
|
|
|
|
|
|
|
|
|
Post-Termination Payment Summary(1)
|
Event
|
|
Al Angrisani
|
|
Eric W. Narowski
|
|
Michael de Vere
|
|
Marc H. Levin
|
|
Change in
Control
|
|
(a) Stock Awards
100% Vest; Stock
Options Cease
Vesting (11)(12)
Total
assuming no termination of employment (9): $425,000
Total assuming
termination of
employment (6)(9): $425,000
|
|
(a) 12 Months Base
Salary (13)(15)
(b) Average annual
bonus value
(13)(14)(15)
(c) Health Benefits 12 months (13)(15)
(d) Certain Stock Options and Stock Awards 100% Vest; Other
Stock Options Vest Upon Certain Events (17)
(e) 6 Months Out-Placement (13)(16)
Total
assuming no termination of employment
(9)(18):$160, comprised of (d)
Total assuming termination of employment (9): $200,609,
comprised of:
(a) $183,000,
(b) $1,250,
(c) $10,699,
(d) $160, and
(e) $5,500
|
|
(a) 7.5 Months Base Salary (8)
(b) Certain Stock Options Vest Upon Certain Events (17)
Total
assuming no termination of employment (9)(18):$0
Total assuming termination of employment (9): $171,875,
comprised of:
(a) $171,875
|
|
(a) 9 Months Base Salary (8)
(b) Health Benefits 9 months (8)
(c) Certain Stock Options Vest Upon Certain Events (17)
Total
assuming no termination of employment
(9)(18):$0
Total assuming termination of employment (9): $219,714,
comprised of:
(a) $206,250, and
(c) $13,464
|
|
|
|
|
|
|
|
|
|
Death
|
|
(a) Stock Options Cease Vesting Total (9): $0
|
|
(a) Certain Stock Options Granted At Least One Year
Previous 100% Vest; Other Stock Options Cease
Vesting
(b) Stock Awards Cease Vesting
Total
(9): $0
|
|
(a) Certain Stock Options Granted At Least One Year
Previous 100% Vest; Other Stock Options Cease
Vesting
Total
(9): $0
|
|
(a) Certain Stock Options Granted At Least One Year
Previous 100% Vest; Other Stock Options Cease
Vesting
Total
(9): $13,464
|
43
|
|
|
|
|
|
|
|
|
Post-Termination Payment Summary(1)
|
Event
|
|
Al Angrisani
|
|
Eric W. Narowski
|
|
Michael de Vere
|
|
Marc H. Levin
|
|
Disability
|
|
(a) Stock Options Cease Vesting Total (9): $0
|
|
(a) Certain Stock Options Granted At Least One Year
Previous 100% Vest; Other Stock Options Cease
Vesting
(b) Stock Awards Cease Vesting
Total
(9): $0
|
|
(a) Certain Stock Options Granted At Least One Year
Previous 100% Vest; Other Stock Options Cease
Vesting
Total
(9): $0
|
|
(a) Certain Stock Options Granted At Least One Year
Previous 100% Vest; Other Stock Options Cease
Vesting
Total
(9): $13,464
|
|
|
|
(1)
|
|
All post-termination cash payments are linked to obligations of
confidentiality and not to compete
and/or
solicit customers and employees for a period of 12 months
following termination of employment.
|
|
(2)
|
|
The events that constitute cause and good
reason with respect to Mr. Angrisani are described
above in Employment Agreements with Named Executive
Officers.
|
|
(3)
|
|
Mr. Narowski does not have an employment agreement and the
Narowski Change in Control Agreement does not address
termination by the Company without cause or
termination by Mr. Narowski with good reason
absent a change in control. Mr. Narowskis severance
arrangement with the Company addresses termination by the
Company without cause, but does not address
termination by Mr. Narowski with good reason.
|
|
(4)
|
|
The events that constitute cause with respect to Mr.
de Vere are described above in Employment Agreements with
Named Executive Officers. The de Vere Agreement does not
address termination by Mr. de Vere with good reason.
|
|
(5)
|
|
The events that constitute cause are not specified
under the Levin Agreement. The Levin Agreement does not address
termination by Mr. Levin with good reason.
|
|
(6)
|
|
If Mr. Angrisani is terminated on or after July 1,
2012 (i) by the Company for any reason other than for
cause or death or disability, or (ii) by
Mr. Angrisani for good reason, then
Mr. Angrisani is entitled to $400,000, payable in 12 equal
monthly installments commencing 30 days after termination
of employment.
|
|
(7)
|
|
If the Company terminates Mr. Angrisanis employment
without cause or Mr. Angrisani terminates his
employment for good reason (i) on or prior to
December 31, 2011, then one-half of the shares of
restricted stock described in footnote (6) to the table
under Grants of Plan Based Awards in Fiscal 2011
vest (inclusive of shares that have vested previously), or
(ii) after December 31, 2011, then all non-vested
shares vest.
|
|
(8)
|
|
Applicable amounts are payable in bi-weekly installments over
applicable term.
|
|
(9)
|
|
Total and category subtotals are based on assumption that
termination or change in control occurred on June 30, 2011,
the last day of the Companys most recent fiscal year, and
that all un-vested, un-exercised stock options and un-vested
restricted stock awards are valued at the closing market price
of the Companys common stock on that date. In the case of
stock options for which vesting is accelerated, the total is the
positive spread, if any, between the exercise price and the
closing market price on June 30, 2011. In the case of stock
options that have ceased vesting, the total equals the number of
options that have vested at the time of termination multiplied
by the positive spread, if any, between the exercise price and
the closing market price on June 30, 2011. In the case of
stock awards that have ceased vesting, the total equals the
number of awards that have vested at the time of termination
multiplied by the closing market price on June 30, 2011.
Aggregate total compensation is shown first, followed by the
subtotal for each category listed above in the same order.
|
44
|
|
|
(10)
|
|
For purposes of this calculation, base salary
includes, on an annualized basis, the monthly bonus
Mr. Narowski receives for his service as Interim Chief
Financial Officer.
|
|
(11)
|
|
Shares of restricted stock described in footnote (6) to the
table under Grants of Plan Based Awards in Fiscal
2011 fully vest upon a change in control.
|
|
(12)
|
|
Stock options described in footnotes (4) and (7) to
the table under Grants of Plan Based Awards in Fiscal
2011 fully vest upon a change in control if the change of
control occurs on or after July 1, 2012 and prior to
Mr. Angrisanis termination of employment.
|
|
(13)
|
|
Applies only if Mr. Narowski is terminated without
cause or leaves with good reason during
the 12 month period following the change in control.
|
|
(14)
|
|
Equals the average of Mr. Narowskis performance
bonuses actually earned during the two full fiscal years most
recently ended.
|
|
(15)
|
|
Amounts are payable in bi-weekly installments in the same manner
and frequency as compensation payments were made prior to the
triggering event. However, if termination is by
Mr. Narowski for good reason due to the failure
of the new employer resulting from the change in control to be
bound by the terms of the Narowski Change in Control Agreement,
then the amounts are payable in a lump sum promptly after the
termination date.
|
|
(16)
|
|
Actual expenses incurred are reimbursed by the Company after the
termination date.
|
|
(17)
|
|
Applies if there is not a Complying Assumption or, upon a
Complying Assumption, the NEO is terminated without
cause (as defined in the applicable equity incentive
agreement) by the acquirer or leaves with good
reason (as defined in the applicable equity incentive
agreement) within the one-year period immediately following the
change in control.
|
|
(18)
|
|
Assumes a Complying Assumption occurred.
|
Director
Compensation
The following table and accompanying footnotes provide
information with regard to the compensation for the
Companys non-employee directors during fiscal 2011.
Ms. Till received no compensation in her role as a director.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FISCAL 2011 DIRECTOR COMPENSATION
|
Name
|
|
Fees Earned or Paid in Cash($)
|
|
Stock Awards($)(1)
|
|
Total($)
|
|
Marty Beard(2)
|
|
|
19,852
|
|
|
|
18,829
|
|
|
|
38,781
|
|
David Brodsky(2)
|
|
|
37,040
|
|
|
|
17,850
|
|
|
|
54,890
|
|
Steven L. Fingerhood(2)
|
|
|
40,000
|
|
|
|
17,850
|
|
|
|
57,850
|
|
Alan Gould(2)
|
|
|
8,264
|
|
|
|
8,677
|
|
|
|
16,941
|
|
Stephen D. Harlan(3)
|
|
|
12,156
|
|
|
|
|
|
|
|
12,156
|
|
James R. Riedman(2)
|
|
|
38,000
|
|
|
|
17,850
|
|
|
|
55,850
|
|
Howard L. Shecter(2)
|
|
|
40,000
|
|
|
|
17,850
|
|
|
|
57,850
|
|
Antoine G. Treuille(2)
|
|
|
35,000
|
|
|
|
14,875
|
|
|
|
49,875
|
|
|
|
|
(1)
|
|
Reflects full grant date fair value of the restricted stock
awards granted during fiscal 2011 and shown in the table below.
There were no options granted to non-employee directors during
fiscal 2011. For restricted stock, fair value is calculated
using the closing market price of the Companys stock on
the date of grant. For additional information as to the
assumptions made in valuation, see Note 14 to the
|
45
|
|
|
|
|
Companys audited financial statements filed with the SEC
in the Companys Annual Report on
Form 10-K
for the fiscal year ended June 30, 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
Awards:
|
|
|
|
|
Number of
|
|
|
Grant
|
|
Shares
|
Name
|
|
Date
|
|
(#)
|
|
Marty Beard
|
|
|
12/15/10
|
|
|
|
15,774
|
|
David Brodsky
|
|
|
11/15/10
|
|
|
|
21,000
|
|
Steven L. Fingerhood
|
|
|
11/15/10
|
|
|
|
21,000
|
|
Alan Gould
|
|
|
5/13/11
|
|
|
|
10,208
|
|
James R. Riedman
|
|
|
11/15/10
|
|
|
|
21,000
|
|
Howard L. Shecter
|
|
|
11/15/10
|
|
|
|
21,000
|
|
Antoine G. Treuille
|
|
|
11/15/10
|
|
|
|
17,500
|
|
|
|
|
(2)
|
|
Following are all equity awards outstanding for each current
director as of June 30, 2011 (stock option awards reflect
unexercised grants of stock options, whether or not vested, and
stock awards reflect awards of shares of restricted stock that
remain subject to forfeiture):
|
|
|
|
|
|
|
|
|
|
Name
|
|
Option Awards(#)
|
|
Stock Awards(#)
|
|
Marty Beard
|
|
|
|
|
|
|
7,170
|
|
David Brodsky
|
|
|
30,000
|
|
|
|
8,750
|
|
Steven L. Fingerhood
|
|
|
|
|
|
|
8,750
|
|
Alan Gould
|
|
|
|
|
|
|
7,291
|
|
James R. Riedman
|
|
|
78,333
|
|
|
|
8,750
|
|
Howard L. Shecter
|
|
|
40,000
|
|
|
|
8,750
|
|
Antoine G. Treuille
|
|
|
30,000
|
|
|
|
7,292
|
|
|
|
|
(3)
|
|
Mr. Harlan opted not to stand for re-election to the Board
at the 2010 Annual Meeting of Stockholders of the Company. His
compensation reflects his services for the portion of the fiscal
year prior to October 27, 2010.
|
In April 2009, the Compensation Committee approved certain
reductions and modifications to non-employee director
compensation that became effective for annual periods commencing
after the 2009 Annual Meeting of Stockholders of the Company, in
order to better align the compensation of the non-employee
directors with the cost control initiatives undertaken by the
Company in response to the challenging global macroeconomic
environment. Non-employee director compensation before and after
this change is shown in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
November 1,
|
|
|
Through October 31,
|
|
2009
|
|
|
2009
|
|
Onward
|
|
All members
|
|
$
|
41,500
|
|
|
$
|
35,000
|
|
Chairman of the Board(1)
|
|
$
|
15,000
|
|
|
$
|
5,000
|
|
Lead Director
|
|
$
|
15,000
|
|
|
$
|
5,000
|
|
Chairman of the Audit Committee
|
|
$
|
7,500
|
|
|
$
|
3,000
|
|
Chairman of the Compensation Committee
|
|
$
|
5,000
|
|
|
$
|
3,000
|
|
46
|
|
|
(1)
|
|
During fiscal 2012, Mr. Shecter will receive a cash
retainer of $10,000 per month in lieu of the cash retainer that
he would have otherwise received for his service as a director
and Chairman of the Board in fiscal 2012 to reflect the
increased advisory role he is expected to have as the Company
transitions to new senior management and pursues key strategic
initiatives.
|
In April 2009, the Compensation Committee agreed that the number
of shares of restricted stock that each non-employee director is
to receive on November 15 of each fiscal year would be
calculated by dividing the annual cash retainer of $35,000 by
the higher of $2.00 and the closing price for the Companys
stock price on that day (or the immediately preceding business
day if November 15 falls on a weekend). Supplemental grants were
granted as shown in the table below.
Each restricted stock grant vests 1/12th on the last day of
each month following the grant date, and any unvested stock is
forfeited upon termination of an individuals service as a
director. Vesting will be accelerated upon a change in control
of the Company.
Supplemental grants of the following numbers of shares of
restricted stock are made on November 15 of each year with
respect to the following positions, subject to the same vesting
rules as the other grants to non-employee directors. The number
of shares to be granted is shown on the table below:
|
|
|
|
|
Position
|
|
Number of Shares
|
|
|
Chairman of the Board(1)
|
|
|
3,500
|
|
Lead Director
|
|
|
3,500
|
|
Chairman of the Audit Committee
|
|
|
3,500
|
|
Chairman of the Compensation Committee
|
|
|
3,500
|
|
|
|
|
(1)
|
|
During fiscal 2012, Mr. Shecter will receive a restricted
stock grant of 120,000 shares that vest 1/12 per month on
the 15
th
day of each month, commencing on July 15, 2011, in lieu of
the equity grants that he would have otherwise received for his
service as a director and Chairman of the Board in fiscal 2012
to reflect the increased advisory role he is expected to have as
the Company transitions to new senior management and pursues key
strategic initiatives.
|
TRANSACTIONS WITH
RELATED PERSONS
Transactions with
Related Persons
On June 7, 2011, the Company entered into a services
agreement (the Services Agreement) with Angrisani
Turnarounds and Mr. Angrisani, pursuant to which
Mr. Angrisani, Chairman and Chief Executive Officer of
Angrisani Turnarounds, agreed to serve as Interim Chief
Executive Officer of the Company, effective immediately, and
continuing through and including June 30, 2012 (the
Service Period), subject to certain early
termination rights set forth therein. The material terms of the
Services Agreement include:
|
|
|
|
|
Angrisani Turnarounds agreement to make Mr. Angrisani
available to serve as Interim Chief Executive Officer of the
Company at a rate of $20,000 per month (the Monthly
Retainer) during the Service Period.
|
|
|
|
Mr. Angrisanis agreement to perform the duties and
responsibilities set forth in the Angrisani Agreement.
|
|
|
|
The Companys agreement to pay Angrisani Turnarounds the
Monthly Retainer through the month of November 2011 or for an
additional three months following the termination date,
whichever occurs later, if the Company terminates
Mr. Angrisanis employment prior to June 30, 2012
without cause (as defined in the Angrisani
Agreement).
|
|
|
|
The Companys agreement to pay Angrisani Turnarounds the
Monthly Retainer through the month of November 2011 if
Mr. Angrisani terminates his employment prior to November
2011 for good reason (as defined in the Angrisani
Agreement).
|
47
|
|
|
|
|
Mr. Angrisanis agreement to be bound by certain
non-competition obligations in the Angrisani Agreement for the
duration of each monthly period associated with a Monthly
Retainer payment.
|
|
|
|
The Companys option, in its sole discretion, to continue
to pay the Monthly Retainer for a minimum of six months
following the end of the Service Period, binding
Mr. Angrisani to the non-competition obligations during
such period.
|
|
|
|
Angrisani Turnarounds agreement to preserve the
confidentiality of non-public confidential and proprietary
information received in the course of the Service Period.
|
|
|
|
The Companys ownership of work product created for the
Company.
|
|
|
|
Limitation of the Companys and Angrisani Turnarounds
liability.
|
|
|
|
Arbitration of disputes.
|
In addition, the Company had separately engaged Angrisani
Turnarounds beginning in March 2011 to provide a thorough review
of the Companys operations and business model, and a
report of observations.
For the fiscal year ended June 30, 2011, the Company
incurred $60,000 in expenses related to services provided by
Angrisani Turnarounds.
Policies and
Procedures for Review of Transactions with Related
Persons
The Board has adopted written Policy and Procedures with Respect
to Related Party Transactions (the Procedure). The
Procedure covers all transactions (Covered
Transactions) in which the Company is a participant and a
Related Person (described below) has a direct or indirect
interest if the amount involved exceeds $120,000, or, if the
applicable Related Person is a director, executive officer, or
spouse of a director or executive officer, $50,000.
Related Persons include:
|
|
|
|
|
any person who is, or at any time since the beginning of the
Companys last fiscal year was, a director or executive
officer of the Company or a nominee to become a director of the
Company;
|
|
|
|
any person who is known to be the beneficial owner of more than
5% of any class of the Companys voting securities;
|
|
|
|
any immediate family member of any of the foregoing persons,
which means any child, stepchild, parent, stepparent, spouse,
sibling,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother-in-law,
or
sister-in-law
of the director, executive officer, nominee or more than 5%
beneficial owner;
|
|
|
|
any person (other than a tenant or employee) sharing the
household of any such director, executive officer, nominee or
more than 5% beneficial owner; and
|
|
|
|
any firm, corporation or other entity in which any of the
foregoing persons is employed or is a partner or principal or in
a similar position or in which such person has a 5% or greater
beneficial ownership interest.
|
The Procedure requires review and approval of Covered
Transactions by the Audit Committee of the Board, or in certain
cases where delay is not practical, by the Chair of the Audit
Committee with reporting to the full Committee. Annual review is
required for ongoing transactions. In its review, the Audit
Committee will consider whether each Covered Transaction is in,
or is not inconsistent with, the best interests of the Company
and its stockholders. Covered Transactions may be approved in
situations, among others, in which:
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the Company may obtain products or services of a nature,
quantity or quality, or on other terms, that are not readily
available from alternative sources; or
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48
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the Company receives from or provides products or services to
the Related Person on an arms length basis on terms
comparable to those provided to unrelated third parties, or on
terms comparable to those provided to employees generally.
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The Audit Committee has granted standing pre-approval for
Covered Transactions that involve:
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compensation of executive officers or directors required to be
approved by the Compensation Committee of the Board;
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transactions in which the Related Persons only
relationship with the company involved is as (i) a
director, (ii) an employee other than an executive officer,
or (iii) less than 10% stockholder and the amount involved
does not exceed $1,000,000 or 2% of that companys annual
revenues;
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charitable contributions when the Related Persons only
relationship to the charity is as a director or employee other
than an executive officer and the aggregate amount does not
exceed the lesser of 2% of the charitys annual receipts
and $120,000, or, if the applicable Related Person is a
director, executive officer, or spouse of one of them,
$50,000; or
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transactions in which all stockholders receive proportional
benefits, and those involving competitive bids, regulated
services and charges, and certain routine banking services.
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PROPOSAL NO. 1:
ELECTION OF
CLASS III DIRECTOR
THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
NOMINEE.
Vote
Required
If a quorum is present and voting at the 2011 Annual Meeting,
the nominee for Class III director receiving the highest
number of affirmative votes of the shares of Harris Interactive
common stock present in person or represented by proxy and
entitled to vote will be elected as a Class III director.
Only votes cast for the nominee will be counted. Abstentions,
broker non-votes and instructions on the accompanying proxy card
to withhold authority to vote for the nominee will result in the
nominee receiving fewer votes. However, the number of votes
otherwise received by the nominee will not be reduced by such
action. In the absence of contrary instructions, the proxy
holders intend to vote all proxies received by them in the
accompanying form of proxy FOR the nominee for
director listed below. In the event that the nominee is unable
to or declines to serve as a director at the time of the 2011
Annual Meeting, the proxies will be voted for any nominee who is
designated by the present Board to fill the vacancy. As of the
date of this Proxy Statement, the Board is not aware that the
nominee is unable or will decline to serve as a director.
Summary of the
Proposal
The Board currently consists of seven directors and is divided
into three classes, with the classes of directors serving for
staggered three-year terms that expire in successive years.
Class III currently has two members, Steven L. Fingerhood
and James R. Riedman, each of whose term expires as of the date
of the 2011 Annual Meeting. Mr. Riedman declined to stand
for re-election in 2011. The Nominating and Governance Committee
proposes that the nominee described below, who is currently
serving as a Class III director, be re-elected as a
Class III director for a term of three years, or until his
successor is duly appointed and qualified.
49
Nominee to Board
of Directors
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Class and Year in
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Which
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Board
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Name
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Principal Occupation
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Director Since
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Term Will Expire
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Age
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Committees
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Mr. Steven L. Fingerhood
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Managing Partner, Technology
Opportunity Partners, LP and SLF Industry, LP
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2008
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Class III 2011
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53
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Lead Director,
Audit,
Compensation,
Nominating and
Governance
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Steven L. Fingerhood
has served as a director of the
Company since April 2008. He is the co-founder and managing
partner of Technology Opportunity Partners, L.P. and SLF
Industry, L.P., private investment partnerships that make
concentrated investments in software and technology-enabled
service companies. Mr. Fingerhood has over twenty years of
experience as an entrepreneur, investor and senior executive in
the technology and business services industries. Before
co-founding Technology Opportunity Partners and SLF Industry, he
founded Zero Gravity Technologies Corporation, which developed
document security solutions, and served as its Chairman and
Chief Executive Officer until its sale to InterTrust
Technologies Corporation. Prior to that, he founded and led
Direct Language Communications, Inc., a provider of localization
services to the technology industry. Mr. Fingerhood
previously served as an independent director for I-many, Inc.
(NASDAQ: IMNY), a provider of enterprise-level contract
management software and services. Mr. Fingerhoods
extensive experience as an entrepreneur and investor, managerial
experience gained through serving in various executive roles,
and previous experience serving as a public company director led
to the conclusion that he should continue to serve as a director
of the Company.
Directors Not
Standing for Election
The members of the Board who are not standing for election at
the 2011 Annual Meeting are set forth below.
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Class and Year
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in Which
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Principal
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Director
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Term Will
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Board
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Name
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Occupation
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Since
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Expire(1)
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Age
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Committees
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Mr. Marty Beard
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President and Chief Executive Officer,
LiveOps Inc.
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2010
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Class I 2012
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47
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Audit, Compensation, Nominating and Governance
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Mr. David Brodsky
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Private Investor
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2001
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Class I 2012
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Audit (Chair), Compensation, Nominating and Governance
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Mr. Alan Gould
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Executive in Residence, Greycroft Partners
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2011
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Class II 2013
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49
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Nominating and Governance
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Mr. James R. Riedman
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Chairman, Phoenix Footwear Group, Inc.
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1989
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Class III 2011
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52
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Audit, Compensation (Chair), Nominating and Governance
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Mr. Howard L. Shecter
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Partner, Reed Smith LLP
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2001
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Class II 2013
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68
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Board Chairman, Audit, Compensation, Nominating and Governance
(Chair)
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Mr. Antoine Treuille
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Partner, Altamont Capital Partners, LLC
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2004
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Class II 2013
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62
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Audit, Compensation, Nominating and Governance
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(1)
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Mr. Riedman is not standing for re-election in 2011.
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Marty Beard
has served as a director of the Company since
December 2010. Mr. Beard is currently President and Chief
Executive Officer of LiveOps Inc., a provider of cloud-based
contact center solutions. From November 2006 to June 2011,
Mr. Beard is served as the President of Sybase 365, Sybase
Corporations mobile services business. Previously, at
Sybase, he served as Senior Vice President, Corporate
Development and Marketing from February 2003 to November 2006,
and as Vice President, Corporate Development from August 2000 to
January 2003. Prior to joining Sybase, Mr. Beard served
from
50
1997 to 2000 as Vice President of Oracle Online, a division of
the Oracle Corporation, and from 1993 to 1997 as Staff Director,
Corporate Strategy of Pacific Telesis Group. From March 2010 to
June 2011, Mr. Beard served as a member of the board of
directors of CTIA-The Wireless Association.
Mr. Beards extensive business and managerial
experience gained through serving in various executive roles led
to the conclusion that he should continue to serve as a director
of the Company.
David Brodsky
has served as a director of the Company
since November 2001. Mr. Brodsky was elected to the Board
pursuant to the terms of the Agreement and Plan of Merger under
which Total Research became part of the Company (the TRC
Merger Agreement). Prior to joining the Board,
Mr. Brodsky served as a director of Total Research
Corporation from June 1998 through November 2001 and as Chairman
from July 1998 to November 2001. Mr. Brodsky has been a
private investor for the past ten years and currently serves as
a director of Southern Union Company (NYSE: SUG) and chair of
that companys Audit Committee. Mr. Brodskys
knowledge of capital markets acquired through his investment
activities and extensive experience as a director and audit
committee chair of public companies led to the conclusion that
he should continue to serve as a director of the Company.
Alan Gould
has served as a director of the Company since
April 2011. He is currently an Executive in Residence at
Greycroft Partners, a venture capital fund focused on digital
media. From May 2009 to November 2010, he served as Chief
Executive Officer of Advertiser Solutions, a business unit of
The Nielsen Company that offers
end-to-end
marketing solutions to advertisers. In 2000, Mr. Gould
founded IAG Research, a provider of real time advertising
effectiveness measures of television programming viewed on TV,
the Internet and mobile devices, and served as its co-Chief
Executive Officer until its acquisition by The Nielsen Company
in May 2008 for $250 million. After the acquisition, IAG
Research was rebranded as Nielsen IAG and Mr. Gould
continued in his position as co-Chief Executive Officer until
April 2009. He was involved in all aspects of IAGs product
development, sales and ongoing financing, and built the company
into the leading provider of engagement metrics in the
television industry, serving many of the worlds largest
advertisers and media companies. Mr. Goulds extensive
business experience, managerial experience gained through
serving in various executive roles, and market research industry
background led to the conclusion that he should continue to
serve as a director of the Company.
James R. Riedman
has served as a director of the Company
since October 1989. Mr. Riedman currently serves as the
Chairman of the board of directors of Phoenix Footwear Group,
Inc. (Amex: PXG), a manufacturer of footwear, a position he has
held since 1996. He has served as a director of that company
since 1993 and served as its Chief Executive Officer from 2001
to 2004 and again on an interim basis from May 2006 to April
2007. From 1987 to 2002, Mr. Riedman served as the
President of the Riedman Corporation, a real estate holding
company and an insurance agency, and he also served as a
director of that corporation over the same period.
Mr. Riedman has served as a director of the Niagara
Insurance Exchange, Norstar Bank N.A. (regional advisory board),
Excellus Long Term Care Insurance Company, and St. Anns
Long Term Care Community.
Howard L. Shecter
has served as a director of the Company
since November 2001. Mr. Shecter was elected to the Board
pursuant to the terms of the TRC Merger Agreement. Prior to
joining the Board, Mr. Shecter served as a director of
Total Research Corporation from June 1998 to November 2001 and
as Vice Chairman from July 1998 through November 2001.
Mr. Shecter currently serves as Senior M&A Partner
with the law firm of Reed Smith LLP. From 2007 to 2009,
Mr. Shecter served as a Senior Partner with the law firm of
Orrick, Herrington & Sutcliffe LLP. Prior to that
time, he was a Senior Partner with the law firm of Morgan,
Lewis & Bockius LLP. Mr. Shecter joined that firm
in 1968 and served as its Managing Partner from 1979 to 1983 and
as Chairman of its Executive Committee in 1985.
Mr. Shecters extensive knowledge in the areas of
business and corporate law, corporate governance, and mergers
and acquisitions, knowledge of crisis and enterprise risk
management, and managerial experience gained as a managing
partner in several law firms led to the conclusion that he
should continue to serve as a director of the Company.
Antoine G. Treuille
has served as a director of the
Company since January 2004. Mr. Treuille is currently the
President of the
French-American
Foundation, a non-governmental organization linking
51
France and the United States at leadership levels. He also
serves as Managing Partner of Altamont Capital Partners, LLC, a
private equity fund, a position he has held since June 2006. He
continues to serve as Executive Managing Partner of Mercantile
Capital Partners, a private equity fund, a position he has held
since September 2000. Prior to Mercantile Capital Partners,
Mr. Treuille was President of Charter Pacific Corporation,
an investment banking firm he founded in New York City, from
1996 to 1998. Before that, he served in executive roles at Desai
Capital Management, Entrecanales Y Travora Inc. and Citibank
N.A. in New York City, as well as Le Credit Chimique in Paris,
France. Mr. Treuille currently serves on the board of
Eramet (Paris: ERA). Mr. Treuille formerly served as
Chairman of the Board of Loehmanns Holdings Inc., as well
as Eye Care Centers of America. He is also a former director of
the Societe Bic (Paris: BB). Mr. Treuilles extensive
international and domestic business experience, expertise
related to global markets, managerial experience gained through
various executive roles in the financial services industry, and
extensive experience as a director of public and private
companies led to the conclusion that he should continue to serve
as a director of the Company.
PROPOSAL NO. 2
RATIFICATION OF
THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING
FIRM
THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL
OF
THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS TO
SERVE AS
THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR FISCAL 2012.
Required
Vote
The affirmative vote of the holders of a majority of the shares
of our common stock present or represented at the 2011 Annual
Meeting and entitled to vote is required for the ratification of
the appointment of PricewaterhouseCoopers (PwC) as
the Companys independent registered public accounting firm
for fiscal 2012. Broker non-votes with respect to this matter
will be treated as neither a vote for nor a vote
against the matter, although they will be counted in
determining whether a quorum is present. Abstentions will be
considered in determining the number of votes required to attain
a majority of the shares present or represented at the 2011
Annual Meeting and entitled to vote. Accordingly, an abstention
from voting by a stockholder present in person or by proxy at
the 2011 Annual Meeting has the same legal effect as a vote
against the matter because it represents a share
present or represented at the meeting and entitled to vote,
thereby increasing the number of affirmative votes required to
approve this proposal.
Summary of the
Proposal
The Audit Committee has appointed PwC to serve as the
Companys independent registered public accounting firm for
fiscal 2012.
If the stockholders do not ratify the selection of PwC, the
Audit Committee will consider a change in auditors for the next
year. Even if the selection of PwC is approved, the Audit
Committee, in its discretion, may direct the appointment of new
independent auditors at any time during the fiscal year if it
believes that such a change would be in the best interest of the
Company and its stockholders.
Representatives of PwC will be present at the 2011 Annual
Meeting to answer appropriate questions. They will also have the
opportunity to make a statement if they desire to do so.
52
Fees Paid to
PwC
The aggregate fees billed by PwC for professional services
rendered to the Company for the fiscal years ended June 30,
2011 and 2010 were $588,800 and $616,000, respectively. An
explanation of such fees is provided in the following table:
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Fiscal
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Fiscal
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2011($)(1)
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2010($)
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Audit Fees
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$
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587,300
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$
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614,500
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Audit-Related Fees
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1,500
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1,500
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Tax Fees
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0
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0
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All Other Fees
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0
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0
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Total Fees Paid
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$
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588,800
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$
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616,000
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(1)
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The amounts shown above reflect the engagement fees mutually
agreed upon by the Audit Committee and PwC in connection with
PwCs audit of the Companys financial statements for
the fiscal year ended June 30, 2011. Additional amounts
related to PwCs audit of the Companys financial
statements for the fiscal year ended June 30, 2011 may
be proposed to the Audit Committee by PwC. However, such
amounts, if any, are unknown as of the date of the filing of
this Proxy Statement.
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Audit Fees
include fees billed by PwC for
(i) auditing our annual financial statements for the fiscal
year, (ii) reviewing our quarterly reports on
Form 10-Q.
Audit-Related Fees include fees for services such as
accounting consultations. Tax Fees are fees billed
for tax services in connection with the preparation of the
Companys federal, state and foreign income tax returns,
including extensions and quarterly estimated tax payments, and
customary consultation or advice regarding accounting issues,
potential transactions or taxes (e.g., tax compliance, tax
consulting, or tax planning). All Other Fees are
fees billed for services not included as Audit Fees,
Audit-Related Fees, and Tax Fees.
The Audit Committee approves the annual budget for all audit and
non-audit services and pre-approves all engagements of the
Companys auditors to provide non-audit services. The Audit
Committee has delegated authority to members of the Committee to
pre-approve non-audit services and any such approvals must be
reported at the next meeting of the Audit Committee. The
Chairman of the Audit Committee did not exercise such delegated
authority during fiscal 2011. The Audit Committees general
policy is to restrict the engagement of the independent
registered public accounting firm to providing audit and
audit-related services. The Audit Committee will not engage the
independent registered public accounting firm to provide any
non-audit services that are prohibited under Section 10A of
the Securities Exchange Act and
Rule 10A-3
thereunder. No fees were approved by the Audit Committee under
the exception provided in Section 10(A)(i)(1)(B) of the
Securities Exchange Act during fiscal 2011 or fiscal 2010.
The Audit Committee considered and determined that the provision
of the services other than the services described under
Audit Fees is compatible with maintaining the
independence of PwC as the Companys independent registered
public accounting firm.
PROPOSAL NO. 3:
APPROVAL OF AN
AMENDMENT TO
2007 EMPLOYEE
STOCK PURCHASE PLAN
THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE 2007 EMPLOYEE STOCK PURCHASE
PLAN.
The Companys stockholders are being asked to approve an
amendment to the Companys 2007 Employee Stock Purchase
Plan, as amended (the ESPP). The proposed amendment
would amend Section 13 of the ESPP to increase the maximum
number of shares issuable under the ESPP from
53
1,500,000 to a total of 2,000,000 shares. The affirmative
vote of the holders of a majority of the shares of our common
stock present or represented at the 2011 Annual Meeting and
entitled to vote is required for adoption of the amendment to
the ESPP. Broker non-votes with respect to this matter will be
treated as neither a vote for nor a vote
against the matter, although they will be counted in
determining if a quorum is present. However, abstentions will be
considered in determining the number of votes required to attain
a majority of the shares present or represented at the 2011
Annual Meeting and entitled to vote. Accordingly, an abstention
from voting by a stockholder present in person or by proxy at
the 2011 Annual Meeting has the same legal effect as a vote
against the matter because it represents a share
present or represented at the 2011 Annual Meeting and entitled
to vote, thereby increasing the number of affirmative votes
required to approve this proposal.
The proposed amendment is intended to ensure that the Company is
able to remain competitive and provide sufficient equity
incentives to attract and retain highly-qualified and
experienced employees. The Board believes that approval of this
amendment is in the best interests of the Company and its
stockholders because the availability of an adequate reserve of
shares under the ESPP is an important factor in attracting,
motivating and retaining qualified executive officers and
employees essential to our success, as well as encouraging them
to be Company stockholders, thereby more closely aligning their
long-term interests with those of the stockholders.
New Plan
Benefits
The benefits to be received by the Companys executive
officers and employees under the ESPP are not determinable
because, under the terms of the ESPP, the amounts of future
stock purchases are based on elections made by participants.
Future purchase prices are not determinable because they are
based on the fair market value of the Companys common
stock. No purchase rights have been granted, and no shares have
been issued, with respect to the 500,000 share increase for
which stockholder approval is being sought.
Summary of the
Provisions of the ESPP
The following is a summary of the principal features of the
ESPP. A copy of the ESPP, including the proposed amendment which
is underlined in Section 13(a), is included as
Appendix A
to this Proxy Statement.
General
Pursuant to the ESPP, employees of the Company and its
subsidiaries may acquire stock ownership interests in the
Company. Employees use payroll deductions to acquire shares of
the Companys common stock under the ESPP. The ESPP is
administered by the Board.
Eligibility
All individuals who are employees of the Company for tax
purposes and whose customary employment with the Company is at
least 20 hours per week and more than five months in any
calendar year are eligible to participate in the ESPP beginning
on the first enrollment date under the ESPP after satisfying the
eligibility requirements. However, an employee is not eligible
to participate in the ESPP if (i) immediately after a
purchase under the ESPP, the employee would own stock possessing
5% or more of the total combined voting power or value of all
classes of stock of the Company or of any subsidiary of the
Company (or ownership of such stock would be attributed to the
employee), including for purposes of this calculation any stock
that the employee may be entitled to purchase under all
outstanding options, or (ii) the employees rights to
purchase stock under all employee stock purchase plans of the
Company and any of its subsidiaries accrues at a rate of more
than $25,000 worth of stock for each calendar year in which such
right is outstanding at any time. As of July 1, 2011, the
most recent enrollment date under the ESPP, approximately 540 of
the Companys employees were eligible to participate in the
ESPP.
54
Participation
in the ESPP
Eligible employees may participate in the ESPP by filing a
subscription agreement and payroll deduction authorization with
the Company. A participant may withdraw from the ESPP at any
time including during offering periods.
Option Grants
and Purchase of Shares
A participant may elect to make purchases through payroll
deductions of up to 10% of his or her base compensation. Base
compensation for purposes of the ESPP generally includes all
base straight time gross earnings and commissions, but excludes
payments for overtime, shift premium, incentive compensation,
incentive payments, bonuses and other compensation. All payroll
deductions must be in increments of 1% of base compensation.
On the first day of each six-month offering period under the
ESPP (the grant date), participants are granted an
option to purchase at the applicable purchase price up to the
number of shares of the Companys common stock that is
equal to (i) the participants payroll deductions
accumulated prior to the exercise date divided by (ii) the
applicable purchase price. The option will be exercised
automatically on the last day of the offering period, June 30
and December 31 of each year (the exercise date). A
participant may not purchase more than 5,000 shares of the
Companys common stock during any particular offering
period. No fractional shares will be issued; any payroll
deductions not sufficient to purchase a full share will be
retained in the participants account for the next offering
period unless the participant terminates participation in the
ESPP prior to such period. Any other monies left in a
participants account after the applicable exercise date
will be returned to the participant.
Purchase
Price
The purchase price per share at which shares are purchased under
the ESPP is an amount equal to 85% of the fair market value of a
share of common stock on the applicable grant date or exercise
date, whichever is lower.
Termination of
Employment
An employees participation in the ESPP will be terminated
when the employee (i) ceases to be employed by the Company
or its subsidiaries for any reason, or (ii) otherwise
ceases to meet the eligibility requirements. Upon a termination
of an employees participation in the ESPP, the payroll
deductions credited to his or her account during the offering
period but not yet used to exercise his or her option to
purchase shares will be returned to the participant or, in the
case of his or her death, to the person or persons entitled
thereto.
Transferability
Neither payroll deductions credited to a participants
account nor any rights relating to the exercise of an option or
to receive shares under the ESPP may be transferred in any way
(other than by will or by the laws of descent and distribution
to the extent provided by the ESPP). During a participants
lifetime, an option to purchase shares under the ESPP is
exercisable only by him or her.
Administration
The Board administers the ESPP. The Board has discretionary
authority to interpret the ESPP, determine eligibility and
adjudicate disputes under the ESPP.
Change in
Control/Adjustment
The ESPP generally provides that, subject to any necessary
stockholder approval, the maximum number of shares a participant
may be entitled to purchase during a particular offering period,
as well as the purchase price and number of shares covered by a
particular option, will be adjusted to reflect any increase or
decrease in the number of issued and outstanding shares of the
Companys common stock resulting from a stock split,
reverse stock split, stock dividend, or similar event. The ESPP
further generally provides that in the event of a proposed
dissolution or liquidation of the Company, the offering period
will terminate
55
immediately prior to the consummation of such proposed action
unless otherwise provided by the Board, and each participant
will have the right to exercise in full his or her option to
purchase shares to the extent of his or her accrued payroll
deductions to date. In the event of a merger or proposed sale of
all or substantially all of the assets of the Company,
outstanding options will be assumed or substituted by the
successor company, but if the successor company refuses to do
so, each participant will have the right to exercise in full his
or her option to purchase shares to the extent of his or her
accrued payroll deductions to date.
Duration,
Amendment and Termination
The Board may terminate or amend the ESPP at any
time.
No such termination may affect options
previous granted, except that the Board may terminate an
offering period on any exercise date if the Board determines
that termination of the ESPP is in the best interests of the
Company and its stockholders. The Board may make certain changes
to the ESPP without stockholder approval, including, among
others, limiting the frequency or number of payroll deduction
rate changes that may be made by participants during an offering
period, establishing the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, and
establishing such other limitations or procedures as the Board
deems advisable in its sole discretion and which are consistent
with the terms of the ESPP. The Board will seek stockholder
approval of amendments to the ESPP to the extent required by
applicable law or stock exchange rule.
Summary of
Federal Income Tax Consequences of the ESPP
The following summary is intended only as a general guide as to
the United States federal income tax consequences under current
law of participation in the ESPP and does not attempt to
describe all possible federal or other tax consequences of such
participation or tax consequences based on particular
circumstances.
The ESPP is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of
the IRC. A participant will not have income upon enrolling in
the ESPP or upon purchasing stock at the end of an offering
period.
A participant may have both compensation income and a capital
gain or loss upon the sale of stock that was acquired under the
ESPP. The amount of each type of income and loss will depend on
when the participant sells the stock.
If the participant sells the stock at a profit (the sales
proceeds exceed the option purchase price) more than two years
after the commencement of the offering during which the stock
was purchased and more than one year after the date on which the
participant purchased the stock, then the participant will have
compensation income equal to the lesser of: (i) the excess
of the fair market value of the stock on the grant date over the
option purchase price; and (ii) the participants
profit. Any excess profit will be long-term capital gain. If the
participant sells the stock at a loss (the sales proceeds are
less than the option purchase price) after satisfying these
waiting periods, then the loss will be a long-term capital loss.
If the participant sells the stock prior to satisfying these
waiting periods, then he or she will have engaged in a
disqualifying disposition. Upon a disqualifying disposition, the
participant will have compensation income equal to the fair
market value of the stock on the day he or she purchased the
stock less the option purchase price. The participant also will
have a capital gain or loss equal to the difference between the
sales proceeds and the value of the stock on the day he or she
purchased the stock. This capital gain or loss will be long-term
if the participant has held the stock for more than one year and
otherwise will be short term.
There will be no tax consequences to the Company except that it
will be entitled to a deduction when a participant has
compensation income upon a disqualifying disposition. Any such
deduction will be subject to Section 162(m) of the IRC.
OTHER
MATTERS
At the date of this Proxy Statement, the only business that the
Board intends to present or knows that others will present at
the 2011 Annual Meeting is as set forth above. If any other
matter or matters are properly brought before the 2011 Annual
Meeting, or any adjournment thereof, it is intended that shares
represented by
56
proxies will be voted or not voted by the persons named in the
proxies in accordance with the recommendation of the Board, or,
in the absence of any such recommendation, by the proxy holders
in their discretion.
COPIES OF ANNUAL
REPORT ON
FORM 10-K
A copy of the Companys Annual Report on
Form 10-K
for the fiscal year ended June 30, 2011 (without exhibits)
is being distributed with this Proxy Statement. The Annual
Report on
Form 10-K
is also available, without charge, by writing or telephoning to
Corporate Secretary, 161 Sixth Avenue, New York,
New York 10013; telephone
(212) 539-9600.
In addition, the report (with exhibits) is available at the
SECs Internet site (www.sec.gov), and in the Investor
Relations section of our website (www.harrisinteractive.com). If
requested, the Company also will provide such persons with
copies of any exhibit to the Annual Report on
Form 10-K
upon the payment of a fee limited to the Companys
reasonable expenses of furnishing such exhibits.
FUTURE
STOCKHOLDER PROPOSALS
Advance Notice
Procedures
Under the Companys Bylaws, no business may be brought
before an annual meeting unless:
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it is specified in the notice of the meeting (which includes
stockholder proposals that the Company is required to include in
its proxy statement pursuant to
Rule 14a-8
under the Securities Exchange Act); or
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it is otherwise brought before the meeting by or at the
direction of the Board, or by a stockholder entitled to vote who
delivered notice to the Company, containing certain information
specified in the Bylaws, not less than 90 nor more than
120 days prior to the first anniversary of the date of the
Companys prior-year proxy statement (between June 2,
2012 and July 2, 2012 for proposals for the 2012 Annual
Meeting of Stockholders of the Company).
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These requirements are separate from and in addition to the
SECs requirements that a stockholder must meet in order to
have a stockholder proposal included in the Companys proxy
statement, described below.
Additionally, the Companys Bylaws require stockholders
desiring to nominate persons for election to the Board to
deliver notice to the Corporate Secretary, containing certain
information specified by the Bylaws, not less than 90 nor more
than 120 days prior to the first anniversary of the date of
the Companys prior-year proxy statement (between
June 2, 2012 and July 2, 2012 for the 2012 Annual
Meeting of Stockholders of the Company).
Stockholder
Proposals for the 2012 Annual Meeting of Stockholders of the
Company
In addition to the advance notice procedures described above,
stockholders interested in submitting a proposal for inclusion
in the proxy materials for the 2012 Annual Meeting of
Stockholders of the Company may do so by following the
procedures prescribed in SEC
Rule 14a-8.
To be eligible for inclusion, stockholder proposals must be
received by the Companys Corporate Secretary by
June 2, 2012 (which date is 120 days prior to the
first anniversary of the date of this Proxy Statement).
Additionally, if a stockholder interested in submitting a
proposal for the 2012 Annual Meeting fails to deliver notice of
such stockholders intent to make such proposal to the
Corporate Secretary between June 2, 2012 and July 2,
2012, then any proxy solicited by management may confer
discretionary authority to vote on such proposal.
57
Appendix A
HARRIS
INTERACTIVE INC.
2007 EMPLOYEE STOCK PURCHASE PLAN
(As Amended on October 27, 2009 and
on ,
2011)
The following constitute the provisions of the 2007 Employee
Stock Purchase Plan of Harris Interactive Inc.
1.
Purpose
.
The purpose of the Plan is
to provide employees of the Company and its Designated
Subsidiaries with an opportunity to purchase Common Stock of the
Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an
Employee Stock Purchase Plan under Section 423
of the Internal Revenue Code of 1986, as amended. The provisions
of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements
of that section of the Code.
2.
Definitions
.
(a)
Board
shall mean the Board of
Directors of the Company.
(b)
Code
shall mean the Internal Revenue
Code of 1986, as amended.
(c)
Common Stock
shall mean the Common
Stock of the Company.
(d)
Company
shall mean Harris
Interactive Inc., a Delaware corporation, and any Designated
Subsidiary of the Company.
(e)
Compensation
shall mean all base
straight time gross earnings and commissions, but exclusive of
payments for overtime, shift premium, incentive compensation,
incentive payments, bonuses and other compensation.
(f)
Designated Subsidiary
shall mean any
Subsidiary which has been designated by the Board from time to
time in its sole discretion as eligible to participate in the
Plan.
(g)
Employee
shall mean any individual
who is an Employee of the Company for tax purposes whose
customary employment with the Company is at least twenty
(20) hours per week and more than five (5) months in
any calendar year. For purposes of the Plan, the employment
relationship shall be treated as continuing intact while the
individual is on sick leave or other leave of absence approved
by the Company. Where the period of leave exceeds 90 days
and the individuals right to reemployment is not
guaranteed either by statute or by contract, the employment
relationship shall be deemed to have terminated on the
91st day of such leave.
(h)
Enrollment Date
shall mean the first
day of each Offering Period.
(i)
Exercise Date
shall mean the last
day of each Offering Period.
(j)
Fair Market Value
shall mean, as of
any date, the value of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without
limitation the Nasdaq stock exchange, its Fair Market Value
shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or
system for the last market trading day on the date of such
determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable, or;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not
reported, its Fair Market Value shall be the mean of the closing
bid and asked prices for the Common Stock on the date of such
determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable, or;
58
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined
in good faith by the Board.
(k)
Offering Period
shall mean a period
ranging from three (3) months to twenty four
(24) months (the precise duration of any Offering Period to
be the Offering Period announced at least five (5) days
prior to its commencement as set forth in Section 4 of this
Plan) during which an option granted pursuant to the Plan may be
exercised, commencing on the first Trading Day on or after the
termination date of the previous Offering Period; provided,
however, that the first Offering Period under the Plan shall
commence with the first Trading Day on or after the date on
which the Securities and Exchange Commission declares the
Companys Registration Statement effective and ending on
the last Trading Day on or before the termination of the
duration of such Offering Period selected by the Board. The
duration and timing of Offering Periods may be changed pursuant
to Section 4 of this Plan.
(l)
Plan
shall mean this Employee Stock
Purchase Plan.
(m)
Purchase Price
shall mean an amount
equal to 85% of the Fair Market Value of a share of Common Stock
on the Enrollment Date or on the Exercise Date, whichever is
lower; provided, however, that the Purchase Price may be
adjusted by the Board pursuant to Section 20.
(n)
Reserves
shall mean the number of
shares of Common Stock covered by each option under the Plan
which have not yet been exercised and the number of shares of
Common Stock which have been authorized for issuance under the
Plan but not yet placed under option.
(o)
Subsidiary
shall mean a corporation,
domestic or foreign, of which not less than 50% of the voting
shares are held by the Company or a Subsidiary, whether or not
such corporation now exists or is hereafter organized or
acquired by the Company or a Subsidiary.
(p)
Trading Day
shall mean a day on
which national stock exchanges and the Nasdaq exchange are open
for trading.
3.
Eligibility
.
(a) Any Employee who shall be employed by the Company on a
given Enrollment Date shall be eligible to participate in the
Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under
the Plan (i) to the extent that, immediately after the
grant, such Employee (or any other person whose stock would be
attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company
and/or
hold
outstanding options to purchase such stock possessing five
percent (5%) or more of the total combined voting power or value
of all classes of the capital stock of the Company or of any
Subsidiary, or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase plans of the
Company
and/or
of
any Subsidiary accrues at a rate which exceeds Twenty Five
Thousand Dollars ($25,000) worth of stock (determined at the
fair market value of the shares at the time such option is
granted) for each calendar year in which such option is
outstanding at any time. Notwithstanding the foregoing, the
Board may provide from time to time that employees who are
highly compensated employees within the meaning of
Section 423(b)(4)(D) of the Code shall not be eligible to
participate.
4.
Offering Periods
.
The Plan shall be
implemented by consecutive Offering Periods with a new Offering
Period commencing on the first Trading Day on or after the
termination of the previous Offering Period, or on such other
date as the Board shall determine, and continuing thereafter
until terminated in accordance with Section 20 hereof. The
Board shall have the power to change the duration of Offering
Periods (including the commencement dates thereof) with respect
to future offerings without stockholder approval if such change
is announced at least five (5) days prior to the scheduled
beginning of the first Offering Period to be affected thereafter.
59
5.
Participation
.
(a) An eligible Employee may become a participant in the
Plan by completing a subscription agreement authorizing payroll
deductions in the form of
Exhibit A
to this Plan and
filing it with the Companys payroll office prior to the
applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on
the first payroll following the Enrollment Date and shall end on
the last payroll in the Offering Period to which such
authorization is applicable.
6.
Payroll Deductions
.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made
on each pay day during the Offering Period in an amount not
exceeding ten percent (10%) of the Compensation which he or she
receives on each pay day during the Offering Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be
withheld in whole percentages only. A participant may not make
any additional payments into such account.
(c) A participant may increase or decrease (including to
zero percent) the rate of his or her payroll deductions during
the Offering Period by completing or filing with the Company a
new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the
number of participation rate changes during any Offering Period.
The change in rate shall be effective with the first full
payroll period following five (5) business days after the
Companys receipt of the new subscription agreement unless
the Company elects to process a given change in participation
more quickly. A participants subscription agreement shall
remain in effect for successive Offering Periods unless
terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary
to comply with Section 423(b)(8) of the Code and
Section 3(b) hereof, a participants payroll
deductions may be decreased to zero percent at any time during
an Offering Period. Payroll deductions shall recommence at the
rate provided in such participants subscription agreement
at the beginning of the first Offering Period which is scheduled
to end in the following calendar year.
(e) At the time the option is exercised, in whole or in
part, or at the time some or all of the Companys Common
Stock issued under the Plan is disposed of, the participant must
make adequate provision for the Companys federal, state or
other tax withholding obligations, if any, which arise upon the
exercise of the option or the disposition of the Common Stock.
At any time, the Company may, but shall not be obligated to,
withhold from the participants compensation the amount
necessary for the Company to meet applicable withholding
obligations, including any withholding required to make
available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by the
Employee.
7.
Grant of Option
.
On the Enrollment
Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be granted an option
to purchase on each Exercise Date during such Offering Period
(at the applicable Purchase Price) up to a number of shares of
the Companys Common Stock determined by dividing such
Employees payroll deductions accumulated prior to such
Exercise Date and retained in the participants account as
of the Exercise Date by the applicable Purchase Price; provided
that in no event shall an Employee be permitted to purchase
during each Offering Period more than 5,000 shares of the
Companys Common Stock (subject to any adjustment pursuant
to Section 19), and provided further that such purchase
shall be subject to the limitations set forth in
Sections 3(b) and 12 hereof. Exercise of the option shall
occur as provided in Section 8 hereof. The option shall
expire on the last day of the Offering Period.
8.
Exercise of Option
.
A
participants option for the purchase of shares shall be
exercised automatically on the Exercise Date, and the maximum
number of full shares subject to option shall be purchased for
such participant at the applicable Purchase Price with the
accumulated payroll deductions in his or her account. No
fractional shares shall be purchased; any payroll deductions
accumulated in a participants account which are not
sufficient to purchase a full share shall be retained in the
participants
60
account for the subsequent Offering Period, unless prior to such
period the participant has terminated participation in the Plan
as provided in Section 10 hereof. Any other monies left
over in a participants account after the Exercise Date
shall be returned to the participant. During a
participants lifetime, a participants option to
purchase shares hereunder is exercisable only by him or her.
9.
Delivery
.
As promptly as practicable
after each Exercise Date on which a purchase of shares occurs,
the Company shall arrange the delivery to each participant, as
appropriate, of a certificate representing the shares purchased
upon exercise of his or her option.
10.
Withdrawal
.
A participant may
withdraw from an Offering Period. A participant may terminate
participation in the Plan for any future Offering Period by
giving written notice of termination to the Company in the form
of Exhibit B.
11.
Termination of Employment
.
Upon a
participants ceasing to be an Employee, for any reason, he
or she shall be deemed to have elected to withdraw from the Plan
and the payroll deductions credited to such participants
account during the Offering Period but not yet used to exercise
the option shall be returned to such participant or, in the case
of his or her death, to the person or persons entitled thereto
under Section 15 hereof, and such participants option
shall be automatically terminated. The preceding sentence
notwithstanding, a participant who receives payment in lieu of
notice of termination of employment shall be treated as
continuing to be an Employee for the participants
customary number of hours per week of employment during the
period in which the participant is subject to such payment in
lieu of notice.
12.
Interest
.
No interest shall accrue
on the payroll deductions of a participant in the Plan.
13.
Stock
.
(a) Subject to adjustment upon changes in capitalization of
the Company as provided in Section 19 hereof, the maximum
number of shares of the Companys Common Stock which shall
be made available for sale under the Plan shall be
two
million (2,000,000) shares
. If, on a given Exercise Date,
the number of shares with respect to which options are to be
exercised exceeds the number of shares then available under the
Plan, the Company shall make a pro rata allocation of the shares
remaining available for purchase in as uniform a manner as shall
be practicable and as it shall determine to be equitable.
(b) The participant shall have no interest or voting right
in shares covered by his or her option until such option has
been exercised.
(c) Shares to be delivered to a participant under the Plan
shall be registered in the name of the participant or in the
name of the participant and his or her spouse. Certificates
representing shares may contain such legends as may be necessary
or appropriate pursuant to applicable securities laws, including
any legends relating to restrictions on transfer as may be
imposed by the Board pursuant to Section 16 of the Plan.
14.
Administration
.
The Plan shall be
administered by the Board or a committee of members of the Board
appointed by the Board. The Board or its committee shall have
full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine
eligibility and to adjudicate all disputed claims filed under
the Plan. Every finding, decision and determination made by the
Board or its committee shall, to the full extent permitted by
law, be final and binding upon all parties.
15.
Designation of Beneficiary
.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from
the participants account under the Plan in the event of
such participants death subsequent to an Exercise Date on
which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to
receive any cash from the participants account under the
Plan in the event of such participants death prior to
exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective.
61
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the
death of a participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of
such participants death, the Company shall deliver such
shares
and/or
cash
to the executor or administrator of the estate of the
participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares
and/or
cash
to the spouse or to any one or more dependents or relatives of
the participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may
designate.
16.
Transferability
.
Neither payroll
deductions credited to a participants account nor any
rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws
of descent and distribution or as provided in Section 15
hereof) by the participant. Any such attempt at assignment,
transfer, pledge or other disposition shall be without effect.
The Board shall have the power to impose such restrictions on
the transfer of shares of Common Stock that may be issued under
the Plan during any Offering Period, if such restrictions are
announced at least five (5) days prior to the scheduled
beginning of the Offering Period to be affected by such
restrictions.
17.
Use of Funds
.
All payroll deductions
received or held by the Company under the Plan may be used by
the Company for any corporate purpose, and the Company shall not
be obligated to segregate such payroll deductions.
18.
Reports
.
Individual accounts shall
be maintained for each participant in the Plan. Statements of
account shall be given to participating Employees at least
annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares
purchased and the remaining cash balance, if any.
19.
Adjustments Upon Changes in Capitalization,
Dissolution, Liquidation, Merger or Asset Sale
.
(a)
Changes in Capitalization
.
Subject
to any required action by the stockholders of the Company, the
Reserves, the maximum number of shares each participant may
purchase each Offering Period (pursuant to Section 7), as
well as the price per share and the number of shares of Common
Stock covered by each option under the Plan which has not yet
been exercised shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been
effected without receipt of consideration. Such
adjustment shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of
shares of Common Stock subject to an option.
(b)
Dissolution or Liquidation
.
In the
event of the proposed dissolution or liquidation of the Company,
the Offering Period then in progress shall be shortened by
setting a new Exercise Date (the New Exercise Date),
and shall terminate immediately prior to the consummation of
such proposed dissolution or liquidation, unless provided
otherwise by the Board. The New Exercise Date shall be before
the date of the Companys proposed dissolution or
liquidation. The Board shall notify each participant in writing,
at least ten (10) business days prior to the New Exercise
Date, that the Exercise Date for the participants option
has been changed to the New Exercise Date and that the
participants option shall be exercised automatically on
the New Exercise Date, unless prior to such date the participant
has terminated participation in the Plan as provided in
Section 10 hereof.
(c)
Merger or Asset Sale
.
In the event
of a proposed sale of all or substantially all of the assets of
the Company, or the merger of the Company with or into another
corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a
parent or Subsidiary of the
62
successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, any
Offering Periods then in progress shall end on the New Exercise
Date. The New Exercise Date shall be before the date of the
Companys proposed sale or merger. The Board shall notify
each participant in writing, at least ten (10) business
days prior to the New Exercise Date, that the Exercise Date for
the participants option has been changed to the New
Exercise Date and that the participants option shall be
exercised automatically on the New Exercise Date, unless prior
to such date the participant has terminated participation in the
Plan as provided in Section 10 hereof.
20.
Amendment or Termination
.
(a) The Board of Directors of the Company may at any time
and for any reason terminate or amend the Plan. Except as
provided in Section 19 hereof, no such termination can
affect options previously granted, provided that an Offering
Period may be terminated by the Board of Directors on any
Exercise Date if the Board determines that the termination of
the Plan is in the best interests of the Company and its
stockholders. Except as provided in Section 19 hereof and
this Section 20, no amendment may make any change in any
option theretofore granted which adversely affects the rights of
any participant. To the extent necessary to comply with
Section 423 of the Code (or any successor rule or provision
or any other applicable law, regulation or stock exchange rule),
the Company shall obtain stockholder approval in such a manner
and to such a degree as required.
(b) Without stockholder consent and without regard to
whether any participant rights may be considered to have been
adversely affected, the Board (or its committee)
shall be entitled to change the Offering Periods, limit the
frequency
and/or
number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit
payroll withholding in excess of the amount designated by a
participant in order to adjust for delays or mistakes in the
Companys processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods
and/or
accounting and crediting procedures to ensure that amounts
applied toward the purchase of Common Stock for each participant
properly correspond with amounts withheld from the
participants Compensation, and establish such other
limitations or procedures as the Board (or its committee)
determines in its sole discretion advisable which are consistent
with the Plan.
(c) In the event the Board determines that the ongoing
operation of the Plan may result in unfavorable financial
accounting consequences, the Board may, in its discretion and,
to the extent necessary or desirable, modify or amend the Plan
to reduce or eliminate such accounting consequences including,
but not limited to:
(i) altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change
in the Purchase Price;
(ii) shortening any Offering Period so that Offering Period
end on a new Exercise Date, including an Offering Period
underway at the time of the Board action; and
(iii) allocating shares.
Such modifications or amendments shall not require stockholder
approval or the consent of any Plan participants.
21.
Notices
.
All notices or other
communications by a participant to the Company under or in
connection with the Plan shall be deemed to have been duly given
when received in the form specified by the Company at the
location, or by the person, designated by the Company for the
receipt thereof.
22.
Conditions Upon issuance of
Shares
.
Shares shall not be issued with respect to
an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with
all applicable provisions of law, domestic or foreign,
including, without limitation, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the
rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may
then
63
be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and
warrant at the time of any such exercise that the shares are
being purchased only for investment and without any present
intention to sell or distribute such shares if, in the opinion
of counsel for the Company, such a representation is required by
any of the aforementioned applicable provisions of law.
23.
Term of Plan
.
The Plan shall become
effective upon its approval by the stockholders of the Company.
It shall continue in effect for a term of ten years unless
sooner terminated under Section 20 hereof
64
Exhibit A
HARRIS
INTERACTIVE INC.
2007 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
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Original Application
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Change in Payroll Deduction Rate
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Change of Beneficiary(ies)
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1) hereby elects to participate in the Harris Interactive
Inc. 2007 Employee Stock Purchase Plan (the Employee Stock
Purchase Plan) and subscribes to purchase shares of the
Companys Common Stock in accordance with this Subscription
Agreement and the Employee Stock Purchase Plan.
2) I hereby authorize payroll deductions from each paycheck
in the amount of % of my
Compensation on each payday (from 1
to %) during the Offering Period in
accordance with the Employee Stock Purchase Plan. (Please note
that no fractional percentages are permitted.)
3) I understand that said payroll deductions shall be
accumulated for the purchase of shares of Common Stock at the
applicable Purchase Price determined in accordance with the
Employee Stock Purchase Plan. I understand that I may withdraw
from an Offering Period and also that any accumulated payroll
deductions will be used to automatically exercise my option.
4) I have received a copy of the complete Employee Stock
Purchase Plan. I understand that my participation in the
Employee Stock Purchase Plan is in all respects subject to the
terms of the Plan. I understand that my ability to exercise the
option under this Subscription Agreement is subject to
stockholder approval of the Employee Stock Purchase Plan.
5) Shares purchased for me under the Employee Stock
Purchase Plan should be issued in the name(s) of (Employee or
Employee and Spouse only): .
6) I understand that if I dispose of any shares received by
me pursuant to the Plan within two (2) years after the
Enrollment Date (the first day of the Offering Period during
which I purchased such shares) or one (1) year after the
Exercise Date, I will be treated for federal income tax purposes
as having received ordinary income at the time of such
disposition in an amount equal to the excess of the fair market
value of the shares at the time such shares were purchased by me
over the price which I paid for the shares. I hereby agree to
notify the Company in writing within 30 days after the date
of any disposition of my shares and I will make adequate
provision for Federal, state or other tax withholding
obligations, if any, which arise upon the disposition of the
Common Stock. The Company may, but will not be obligated to,
withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding
necessary to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common
Stock by me. If I dispose of such shares at any time after the
expiration of the 2 year and 1 year holding periods, I
understand that I will be treated for federal income tax
purposes as having received income only at the time of such
disposition, and that such income will be taxed as ordinary
income only to the extent of an amount equal to the lesser of
(1) the excess of the fair market value of the shares at
the time of such disposition over the purchase price which I
paid for the shares, or (2) 15% of the fair market value of
the shares on the first day of the Offering Period. The
remainder of the gain, if any, recognized on such disposition
will be taxed as capital gain.
7) I hereby agree to be bound by the terms of the Employee
Stock Purchase Plan, including any restrictions on the
transferability of any shares received by me pursuant to the
Plan. The effectiveness of this Subscription Agreement is
dependent upon my eligibility to participate in the Employee
Stock Purchase Plan.
8) In the event of my death, I hereby designate the
following as my beneficiary(ies) to receive all payments and
shares due me under the Employee Stock Purchase Plan:
65
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Employees Social Security Number:
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I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN
EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED
BY ME.
Signature of Employee
Spouses Signature
(If beneficiary other than spouse)
66
VOTE BY INTERNET www.proxyvote.com Use the Internet to transmit your voting instructions and
for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the meeting
date. Have your proxy card in hand when you access the web site and follow the instructions
HARRIS INTERACTIVE INC. to obtain your records and to create an electronic voting
instruction form. 161 SIXTH AVENUE NEW YORK, NY 10013 ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS If you would like to reduce the costs incurred by Harris Interactive Inc. in mailing
proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual
reports electronically via e-mail or the Internet. To sign up for electronic delivery, please
follow the instructions above to vote using the Internet and, when prompted, indicate that you
agree to receive or access proxy materials electronically in future years. VOTE BY PHONE -
1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59
p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and
then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Harris Interactive Inc., c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
M38694-P15963 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED. DETACH AND RETURN THIS PORTION ONLY HARRIS INTERACTIVE INC. For Withhold For All To
withhold authority to vote for any individual All All Except nominee(s), mark For All Except and
write the The Board of Directors recommends that you vote number(s) of the nominee(s) on the line
below. FOR the Nominee and FOR Proposals 2 and 3: Vote on Director 1. Election of Class III
Director: Nominee: 01) Steven L. Fingerhood Vote on Proposals For Against Abstain 2. Ratification
of Appointment of PricewaterhouseCoopers LLP as the Companys Independent Auditors for Fiscal Year
2012. 3. Approval of Amendment to 2007 Employee Stock Purchase Plan to Increase Shares Available
for Issuance by 500,000 Shares. 4. In their discretion, the Proxies are authorized to vote on such
other business as may properly come before the Annual Meeting or any adjournment(s) thereof. PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. NOTE: Please sign exactly as your name or
names appear(s) on this proxy. When shares are held jointly, each holder should sign. When signing
as executor, administrator, attorney, trustee or guardian, please give full title as such. If the
signer is a corporation, please sign full corporate name by duly authorized officer, giving full
title as such. If signer is a partnership, please sign in partnerships name by authorized person.
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
M38695-P15963 REVOCABLE PROXY HARRIS INTERACTIVE INC. 161 SIXTH AVENUE, NEW YORK, NEW YORK
10013 PROXY SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS OF HARRIS INTERACTIVE INC. FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON TUESDAY, NOVEMBER 1, 2011 The undersigned hereby
constitutes and appoints Michael de Vere and Eric W. Narowski, and each of them, as proxies (the
Proxies) of the undersigned, with full power of substitution in each, and authorizes each of them
to represent and to vote all shares of common stock, par value $0.001 per share, of Harris
Interactive Inc. (Harris Interactive) held of record by the undersigned as of the close of
business on September 6, 2011, at the Annual Meeting of Stockholders (the Annual Meeting) to be
held on Tuesday, November 1, 2011 at 161 Sixth Avenue (at Spring Street), Sixth Floor, New York,
New York at 5:30 p.m. (local time), and at any adjournments thereof. When properly executed, this
proxy will be voted in the manner directed herein by the undersigned stockholder(s). IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEE SET FORTH ON THE REVERSE SIDE IN
PROPOSAL 1, FOR PROPOSAL 2 TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS HARRIS
INTERACTIVES AUDITORS FOR FISCAL 2012, FOR PROPOSAL 3 TO APPROVE AN AMENDMENT TO THE 2007
EMPLOYEE STOCK PURCHASE PLAN TO INCREASE SHARES AVAILABLE AND, IN THE DISCRETION OF THE PROXIES, ON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF.
Stockholders also have the option of voting by telephone or via the Internet, and may revoke this
proxy, following procedures described in the accompanying Proxy Statement. The undersigned hereby
acknowledge(s) receipt of the Notice of Annual Meeting and Proxy Statement, dated September 30,
2011, and a copy of Harris Interactives 2011 Annual Report on Form 10-K for the fiscal year ended
June 30, 2011. The undersigned hereby revoke(s) any proxy or proxies heretofore given with respect
to the Annual Meeting. PLEASE DATE, SIGN, AND MAIL YOUR PROXY CARD IN THE ENVELOPE PROVIDED AS SOON
AS POSSIBLE.
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