REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
The Compensation Committee, which is comprised of three independent directors, recommends to the Company's Board of
Directors compensation of Company directors and officers and oversees the administration of the Company's 2005 Equity Incentive Plan.
Management of the Company has prepared the Compensation Discussion and Analysis as required by Item 402(b) of
Regulation S-K, and the Compensation Committee has reviewed and discussed it with management. Based on this review and discussion, the
Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Proxy Statement
for the Company's 2008 Meeting of Stockholders.
COMPENSATION COMMITTEE
Dr. Hans-Georg Betz, Chairman
Kenneth Kannappan
Kenneth G. Smith
April 16, 2008
24
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of two Class I directors (John Bolger and Kenneth Kannappan), three
Class II directors (Dr. Hans-Georg Betz, David Dutton and Kenneth Smith) and two Class III directors (Dr. Jochen Melchior and Shigeru Nakayama). Class I,
II and III directors will serve until the Annual Meetings of Stockholders to be held in 2010, 2008, and 2009, respectively, and until their respective successors
are duly elected and qualified. At each Annual Meeting of Stockholders, directors are elected for a full term of three (3) years to succeed those directors
whose terms expire on the Annual Meeting date.
The term of the Class II directors will expire on the date of the upcoming Annual Meeting. Accordingly, three persons are to be
elected to serve as Class II directors of the Board of Directors at the Meeting. Management's nominees for election by the stockholders to those three
positions are the current Class II members of the Board of Directors, Dr. Hans-Georg Betz, David Dutton and Kenneth Smith. Unless otherwise directed by
stockholders, the proxyholders will vote all shares represented by proxies held by them for the election of the management nominees. In the event that
either Dr. Betz, Mr. Dutton or Mr. Smith becomes unavailable or unable to serve as a director of the Company prior to the voting, the proxyholders will refrain
from voting for the unavailable nominee and will vote for a substitute nominee in the exercise of their best judgment.
Vote Required and Recommendation of the Board of Directors
If a quorum is present for voting at the Annual Meeting, the three nominees for Class II director receiving the highest number of
votes will be elected as Class II directors. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a
quorum, but will have no effect on the vote.
The Board unanimously recommends a vote FOR the nominees listed herein.
The following table sets forth, for the Company's current directors, including the Class II nominees to be elected at this
Meeting, information with respect to their ages as of December 31, 2007 and their background.
|
Name
|
Age
|
Title
|
Director
Since
|
|
Class I directors whose terms expire at the 2010 Annual Meeting of Stockholders:
|
|
John C. Bolger
|
61
|
Director
|
December 2006
|
|
Kenneth Kannappan
|
48
|
Director
|
July 1998
|
|
|
|
Class II directors whose terms expire at the 2008 Annual Meeting of Stockholders:
Nominees for reelection at the Annual Meeting:
|
|
Dr. Hans-Georg Betz
|
61
|
Director
|
January 2001
|
|
David L. Dutton
|
47
|
Director
|
December 2001
|
|
Kenneth G. Smith
|
58
|
Director
|
August 1994
|
|
|
|
Class III directors whose terms expire at the 2009 Annual Meeting of Stockholders:
|
|
Dr. Jochen A. Melchior
|
65
|
Director (Chairman)
|
January 2001
|
|
Shigeru Nakayama
|
72
|
Director
|
May 1996
|
25
Dr. Jochen A. Melchior
has served as a director and Chairman since January 2001. Dr. Melchior served as a member of the
Management Board of STEAG AG from June 1987 until December 2004, and as Chairman of the Management Board and Chief Executive Officer of
STEAG AG from November 1995 until December 2004. From November 1995 until December 2004, Dr. Melchior also served as Chairman of the
Supervisory Board of STEAG Electronic Systems AG. Dr. Melchior currently serves as a member of the Supervisory Boards of AXA Service AG,
National-Bank AG, Kloeckner + Co. AG, and Universitaetsklinikum Essen. He serves as Chairman of the Supervisory Board of Tecon Technologies AG.
Dr. Hans-Georg Betz
has served as a director since January 2001. Dr. Betz also serves as Chairman of the Company's
Compensation Committee. Since August 2005, Dr. Betz has served as President and Chief Executive Officer of Advanced Energy Industries, Inc. Dr. Betz
served as Chief Executive Officer of West STEAG Partners from August 2001 until August 2005, as Chairman of the Management Board and Chief
Executive Officer of STEAG Electronic Systems AG from January 1996 to July 2001, and as a member of the Management Board of STEAG Electronic
Systems AG from October 1992 to July 2001. Dr. Betz served as a member of the Management Board of STEAG AG from January 1997 to July 2001.
John C. Bolger
has been a director since December 2006. Mr. Bolger also serves as Chairman of the Company's Audit
Committee. Mr. Bolger is a retired Vice President of Finance and Administration of Cisco Systems, Inc., a manufacturer of computer networking
systems. Mr. Bolger is currently a private investor and has served as a director of Cogent, Inc. since 2004; Mission West Properties, Inc. since 1998;
and Wind River Systems, Inc. since 2000; all of which are public companies. Mr. Bolger received a B.A. from the University of Massachusetts in 1969
and an M.B.A. from Harvard University in 1971. He is a Certified Public Accountant.
David L. Dutton
has served as Mattson's Chief Executive Officer since June 2005 and as a director since December 2001.
Prior to that, Mr. Dutton served as Mattson's Chief Executive Officer and President since October 2001. From 1998 to 2000, Mr. Dutton served
as Executive Vice President and Chief Operating Officer of Mattson. Mr. Dutton previously served as President of the Plasma Products Division.
Mr. Dutton joined Mattson in 1994 as General Manager of the Strip/Plasma Etch division. Mr. Dutton started his career in the semiconductor
industry in 1984 and held engineering management positions for wafer processing and development at Intel Corporation and Maxim Integrated
Products, Inc. Mr. Dutton serves on the Board of Directors for the Bay Area Council.
Kenneth Kannappan
has served as a director since July 1998. Mr. Kannappan has served as the President and Chief
Executive Officer of Plantronics, Inc., a telecommunications equipment manufacturer, since March 1998. From 1995 to 1998, Mr. Kannappan held various
executive positions at Plantronics, Inc. From 1991 to 1995, Mr. Kannappan was Senior Vice President of Kidder, Peabody & Co. Incorporated, an
investment banking company. Mr. Kannappan currently serves as a member of the board of directors of Plantronics, Inc.
Shigeru Nakayama
has served as a director since May 1996. Since 1996, Mr. Nakayama has been a business consultant to
Semiconductor Equipment and Materials International, an international association of semiconductor equipment manufacturers and materials suppliers.
From 1984 to 1994, Mr. Nakayama was the President of SEMI Japan, a member of Semiconductor Equipment and Materials International.
Kenneth G. Smith
has served as a director since August 1994. Mr. Smith was President, Chief Operating Officer and a
Director of WaferTech, a semiconductor manufacturer, from May 1996 until April 2000. From 1991 to 1995, Mr. Smith was Vice President of Operations at
Micron Semiconductor, Inc., a semiconductor manufacturer.
Board Meetings and Committees
During the year ended December 31, 2007, the Board of Directors held five meetings. During 2007, each director attended at
least 75% of the meetings of the Board and of each of the Committees on which he served. The Board of Directors has determined that Messrs. Betz,
Bolger, Kannappan, Melchior, Nakayama and Smith are each an independent director for purposes of the applicable NASDAQ listing standards. The Board
of Directors of the Company has a standing Audit Committee, Compensation Committee and Nominating and Governance Committee, each of which has a
written charter. The Committee charters can be viewed at the Company's web site at http://www.mattson.com.
26
For a description of the principal functions of the Audit Committee, see "Report of the Audit Committee." During 2007, the
Audit Committee consisted of Mr. Bolger, Mr. Kannappan and Mr. Smith, each of whom is independent for purposes of the NASDAQ listing standards. The
Audit Committee held nine meetings during 2007.
The principal functions of the Compensation Committee are to set the salary and bonus earned by the Chief Executive Officer
and other executive officers of the Company; to establish the compensation of directors for service on the Board and Board Committees of the Company; to
review all components of executive officer and director
compensation for consistency with the Committee's compensation philosophy as in effect
from time to time; to review compensation policies applicable to the entire Company; to oversee the administration of the Company's stock option and stock
purchase plans; and to perform such other duties regarding compensation for employees, consultants and directors as the Board may delegate from time to
time. See "Compensation Discussion and Analysis - Corporate Governance." During 2007, the Compensation Committee consisted of Dr. Betz,
Mr. Kannappan and Mr. Smith, each of whom is independent for purposes of the NASDAQ listing standards. The Compensation Committee held four
meetings during 2007.
The principal functions of the Nominating and Governance Committee are to identify individuals
qualified to become Board members; select, or recommend to the Board, director nominees for each election of directors; develop and recommend to the
Board criteria for selecting qualified director candidates; consider committee member qualifications, appointment and removal; and recommend corporate
governance principles applicable to the Company, and provide oversight in the evaluation of the Board and each committee. During 2007, the Nominating
and Governance Committee consisted of Dr. Betz, Mr. Nakayama, and Mr. Smith. Each of the members of the Nominating and Governance Committee is
independent for purposes of the NASDAQ listing standards. The Nominating and Governance Committee held two meetings during 2007.
Compensation of Directors
The following table provides compensation information for the year ended December 31, 2007 for each non-employee member of
the Company's Board of Directors:
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
Earned
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
All
|
|
|
|
|
|
or Paid in
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
Other
|
|
|
Name
|
|
Cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
|
Dr. Hans-Georg Betz
|
|
$ 51,000
|
|
$ 2,878
|
|
$ 56,292
|
|
—
|
|
—
|
|
—
|
|
$ 110,170
|
|
John C. Bolger
|
|
$ 57,000
|
|
—
|
|
$ 47,729
|
|
—
|
|
—
|
|
—
|
|
$ 104,729
|
|
Kenneth Kannapan (1)
|
|
—
|
|
$ 2,878
|
|
$ 58,102
|
|
—
|
|
—
|
|
—
|
|
$ 60,980
|
|
Dr. Jochen A. Melchior
|
|
$ 59,000
|
|
$ 2,878
|
|
$ 68,391
|
|
—
|
|
—
|
|
—
|
|
$ 130,269
|
|
Shigeru Nakayama
|
|
$ 40,000
|
|
$ 2,878
|
|
$ 50,841
|
|
—
|
|
—
|
|
—
|
|
$ 93,719
|
|
Kenneth G. Smith
|
|
$ 53,000
|
|
$ 2,878
|
|
$ 58,102
|
|
—
|
|
—
|
|
—
|
|
$ 113,980
|
___________
-
Mr. Kannapan received $48,000 in fees during the year ended December 31, 2007, which have been
excluded from this table, as all of such fees were contributed to his non-qualified deferred compensation account.
In 2007, the Chairman of the Board received a $55,000 annual retainer, other non-employee directors received a $35,000
annual retainer, and all non-employee directors received $1,000 per Board meeting attended. The Chairman of the Audit Committee received an additional
$10,000 annual retainer, the Chairman of the Compensation Committee received an additional $7,000 annual retainer, and all committee members received
$1,000 per committee meeting attended. The Company reimburses its non-employee directors for travel expenses and other out-of-pocket expenses
associated with attending meetings.
The Company's 2005 Equity Incentive Plan allows for the grant of options and other forms of equity to the Company's non-employee
directors. Currently, each non-employee director who has continuously served on the
27
Board for six months as of the date of the Annual Meeting of
Stockholders will be granted 2,000 restricted stock units and an option to purchase 10,000 shares or, in the case of the Chairman, 2,000 restricted stock
units and an option to purchase 14,000 shares, on the date of each Annual Meeting of Stockholders. In addition, each member of the Audit Committee who
attends at least 75% of the Committee's meetings during the prior year is granted an option to purchase an additional 2,000 shares on the date of the
Annual Meeting of Stockholders.
Option award amounts are presented based on their grant date fair market value. Grant date fair value is calculated in
accordance with SFAS No. 123(R). The Company uses the Black-Scholes model to calculate fair value to determine stock option-based compensation
expense. For more information regarding the assumptions used in determining grant date fair value under SFAS No. 123(R), refer to the notes to the
Company's consolidated financial statements included in the Company's 2007 Annual Report on Form 10-K.
Policy and Procedure for Director Nomination
When there is a vacancy on the Board of Directors, the Nominating and Governance Committee is responsible for evaluating
candidates to fill such vacancy. The Nominating and Governance Committee is responsible for reviewing the qualifications, independence and skill of all
candidates for election to the Board of Directors. The Nominating and Governance Committee does not currently have a formalized policy with regard to the
assessment of director candidates. The Nominating and Governance Committee believes that is appropriate not to have any such formalized policy in order
to afford the Committee with the maximum flexibility to assess and select director candidates based on the criteria deemed most relevant by the Committee
at such time. The Nominating and Governance Committee intends to consider adopting such a policy.
The Nominating and Governance Committee will consider director candidates recommended by stockholders of the Company,
based on the same criteria that would apply to candidates identified by a Committee member. There are no specific, minimum qualifications that have been
formulated by the Nominating and Governance Committee that must be met by a Nominating and Governance Committee-recommended nominee. The
Nominating and Governance Committee believes that it is desirable for a majority of the Company's directors to satisfy the definition of independence for
purposes of the applicable NASDAQ listing standards, and for at least one director to possess the attributes necessary to be an "audit committee
financial expert."
Any stockholder who wishes to recommend a candidate for nomination as a director should submit the recommendation in writing to
the Company at its principal executive offices, to the attention of the Nominating and Governance Committee, not later than 120 calendar days before the
one-year anniversary of the Company's mailing of its prior year's Proxy Statement to stockholders. A stockholder recommending a person as a director
candidate may be requested by the Nominating and Governance Committee to provide further information for purposes of evaluating the candidate and for
the purpose of providing appropriate disclosure to stockholders.
Stockholder Communications with the Directors
Any stockholder wishing to communicate with the full Board of Directors or any individual directors regarding the Company may write
to the director, c/o John Horn, Secretary, Mattson Technology, Inc., 47131 Bayside Parkway, Fremont, California 94538. Communications from stockholders
to one or more directors will be collected and organized by the Company's Corporate Secretary under procedures approved by the independent directors.
The Corporate Secretary will forward all communications to the Chairman of the Board of Directors, or to the identified director(s), as soon as practicable,
although communications that are abusive, in bad taste or that present safety or security concerns may be handled differently. The Corporate Secretary
may, in his discretion, not forward correspondence if it is primarily commercial in nature or if it relates to an improper or irrelevant topic. If multiple
communications are received on a similar topic, the Corporate Secretary may, in his discretion, forward only representative correspondence.
Director Attendance at Annual Stockholder Meeting
The Company typically schedules a Board meeting in conjunction with the Annual Meeting of Stockholders. The Company expects,
but does not require, that all directors will attend, absent a valid reason, such as a schedule conflict. Last year, all seven members of the Board of Directors
attended the Annual Meeting.
28
Certain Relationships and Related Transactions
, and Director Independence
Other than the transactions described immediately below, during the year ended December 31, 2007 and subsequent to such date,
there was no transaction or series of transactions, and there is no proposed transaction or series of transactions, to which the Company was or is a party in
which the amount involved exceeded or exceeds $120,000 and in which any director, executive officer, holder of more than 5% of the Company's common
stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.
In Japan, through May 2007 the Company contracted outsource installation and repair services and sold spare parts through an
unrelated party, Mattson Service Company (MSC). A director of the Company, Shigeru Nakayama, held a minority, non-controlling interest in MSC, but no
longer does so. In 2007, 2006 and 2005, the value of spare parts and services transactions between the Company and MSC were $0.5 million, $4.2 million
and $2.9 million, respectively. The Company's management believes that the payments of commissions to MSC related to the sales of spare parts to
customers in Japan and the purchases of contract installation and repair services from MSC were on terms that represent the fair market value of these
transactions.
The Company has entered into indemnification agreements with certain of its directors in which the Company has agreed to
indemnify such directors to the fullest extent allowable under Delaware law if any such director is made a party to any action or threatened with any action
as a result of such person's service or having served as an officer, director, employee or agent of the Company or having served, at the Company's request,
as an officer, director, employee or agent of another company.
Under applicable Nasdaq listing standards, a majority of the members of the Company's Board of Directors must qualify as
"independent," as affirmatively determined by the Board. The Board has determined that a majority of its members are "independent"
within the meaning of the Nasdaq listing standards. Specifically, the following members of the Board have been determined to be independent: Dr. Betz, Mr.
Bolger, Mr. Kannappan, Dr. Melchior Mr. Nakayama and Mr. Smith.
Consistent with the requirements of the SEC, Nasdaq and general corporate "best practices" proposals, the Board of
Directors reviews all relevant transactions or relationships between each director and the Company, senior management and the Company's independent
auditors. During this review, the Board considers whether there are any transactions or relationships between directors or any of their immediate family
members (or any entity of which a director or an immediate family member is an executive officer, general partner or significant equity holder) and members
of the Company's senior management or their affiliates. The Board consults with the Company's corporate counsel to ensure that the Board's
determinations are consistent with all relevant securities and other laws and regulations regarding the definition of "independence," including
those set forth in pertinent Nasdaq listing standards, as in effect from time to time.
Each member of the Compensation Committee and the Corporate Governance and Nominating Committee of the Board is
comprised entirely of directors who are independent within the meaning of the Nasdaq listing standards, and each member of the Audit Committee is
independent under applicable Nasdaq listing standards and SEC rules.
Compensation Committee Interlocks and Insider Participation
During 2007, the Compensation Committee consisted of Dr. Betz, Mr. Kannappan and Mr. Smith. No interlocking relationship exists
between any member of the Company's Board of Directors or Compensation Committee and any member of the board of directors or compensation
committee of any other company.
29
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected PricewaterhouseCoopers LLP ("PwC") as the
Company's independent registered public accountants for the year ending December 31, 2008. Representatives of PwC are expected to be present at the
Meeting, and will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
Stockholder ratification of the selection of PwC as the Company's independent registered public accountants is not required by the
Company's Bylaws or otherwise. The Company is submitting the selection of PwC to the stockholders for ratification as a matter of good corporate practice.
In the event the stockholders fail to ratify the selection, the Audit Committee of the Board of Directors will reconsider whether or not to retain that firm. Even
if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any
time during the year if the Audit Committee determines that such a change could be in the best interests of the Company and its stockholders.
Vote Required and Recommendation of the Board of Directors
The affirmative vote of a majority of the votes present or represented by proxy and entitled to a vote at the Annual Meeting of
Stockholders, at which a quorum representing a majority of all outstanding shares of Common Stock of the Company is present and voting, is required for
approval of this proposal. Abstentions and broker nonvotes will each be counted present for purposes of determining the presence of a quorum, but will not
be counted as having been voted on this proposal.
The Board unanimously recommends a vote FOR the ratification of the appointment of PwC to serve as the Company's
independent registered public accountants for the year ending December 31, 2008.
Audit and Related Fees
The following table presents fees paid by the Company for professional services rendered by PricewaterhouseCoopers
LLP ("PwC") for the years ended December 31, 2007 and 2006.
|
|
|
Fiscal 2007
|
|
Fiscal 2006
|
|
Audit Fees
|
|
$ 1,365,011
|
|
$ 1,607,315
|
|
Audit-Related Fees
|
|
110,000
|
|
—
|
|
Tax Fees
|
|
—
|
|
—
|
|
All Other Fees
|
|
—
|
|
—
|
|
Total Fees
|
|
$ 1,475,011
|
|
$ 1,607,315
|
Audit Fees
were for professional services rendered for the audit of the Company's consolidated financial
statements included in the Company's Annual Report on Form 10-K, review of the interim consolidated financial statements included in quarterly reports on
Form 10-Q, audit and assessment of the Company's internal controls over financial reporting and services that are normally provided by PwC in connection
with statutory and regulatory filings or engagements.
Audit-Related Fees
were for assurance and related services that are reasonably related to the performance of
the audit or review of the Company's consolidated financial statements and are not reported under "Audit Fees." These services include
accounting consultations and work related to adopting FIN 48.
Tax Fees
were for professional services for Federal, state and international tax compliance, tax advice and tax
planning.
All Other Fees
were for services other than the services reported above.
30
All of the services reflected in the table were pre-approved by the Audit Committee.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Registered Public Accountants
The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent auditors. These
services may include audit services, audit-related services, tax services and other services. Any pre-approval is detailed as to the particular service or
category of services, and is generally subject to a specific budget. The independent auditors and management periodically report to the Audit Committee
regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date.
In addition, any audit and non-audit fees for newly proposed professional services that arise during the year, or changes to previously approved fees and
work, are reviewed and approved in advance of commencement of such services by the Audit Committee at their regularly scheduled meetings throughout
the year. Should a situation arise that requires approval between meetings, the Audit Committee has delegated authority to its Chairman to authorize such
pre-approval and report on the same at the next regularly scheduled meeting.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is responsible for monitoring the integrity of the Company's consolidated financial
statements, its system of internal controls and the independence and performance of its independent registered public accounting firm (the
"independent auditors"). The Audit Committee is also responsible for the selection of the Company's independent auditors, and approves all
professional services performed by the independent auditors. The Audit Committee is composed of three independent, non-employee directors and
operates under a written charter adopted and approved by the Board of Directors. The charter for the Audit Committee has been amended as of the date of
this Proxy Statement, and the charter as amended is included herein as
Appendix One
. The Audit Committee Charter is also available on
the Company's website. The members of the Audit Committee at December 31, 2007 were John Bolger (Chairman), Kenneth Kannappan and Kenneth
Smith. Each of the members of the Audit Committee is independent for purposes of the NASDAQ listing standards as they apply to audit committee
members. The Board has determined that Mr. Bolger is an "audit committee financial expert" as defined by SEC rules.
Management is responsible for the financial reporting process, for establishing and maintaining adequate internal control over
financial reporting, and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United
States of America. The independent auditors have the responsibility to express an opinion on the financial statements and on the internal control over
financial reporting based on an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (U.S.). Our
responsibility is to monitor and review these processes, as well as to review the independent audit plan and the reports of the independent auditors. We rely
on the information provided to us and on the representations made by management and the independent auditors.
In this context, we held nine meetings during 2007. The meetings were designed, among other things, to facilitate and encourage
communication among the Audit Committee, management and the Company's independent auditors. PwC performed the audit of the Company's financial
statement for 2007 as its independent auditors and has been selected by the Audit Committee to perform the audit for 2008. We discussed with the
Company's management and PwC the overall scope of and plan for the 2007 audit before it was performed by PwC. We met with PwC to discuss the results
of their examination.
We have reviewed and discussed with management and PwC the audited consolidated financial statements for the year ended
December 31, 2007 contained in the Annual Report on Form 10-K for the year ended December 31, 2007. We also discussed with the independent auditors
matters required to be discussed with audit committees under auditing standards generally accepted in the United States of America, including, among other
things, matters related to the conduct of the audit of the Company's consolidated financial statements and the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended (Communication with Audit Committees).
31
The Company's independent auditors also provided to us the written disclosures and a letter required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees), and we discussed with the independent auditors their independence from the
Company. When considering PwC's independence, we considered whether their provision of services to the Company beyond those rendered in connection
with their audit and review of the Company's consolidated financial statements was compatible with maintaining their independence. We also reviewed and
pre-approved, among other things, the fees paid to the independent auditors for audit and non-audit services.
Based on our review and these meetings, discussions and reports, and subject to the limitations on our role and responsibilities
referred to above and in the Audit Committee Charter, we recommended to the Board of Directors that the Company's audited consolidated financial
statements for the year ended December 31, 2007 be included in the Company's Annual Report on Form 10-K.
AUDIT COMMITTEE
April 16, 2008
John C. Bolger, Chairman
Kenneth Kannappan
Kenneth G. Smith
32
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
The Company has an advance notice provision under its bylaws for stockholder business to be presented at meetings of
stockholders. Such provision states that in order for stockholder business to be properly brought before a meeting by a stockholder, such stockholder must
have given timely notice thereof in writing to the Secretary of the Company. A stockholder proposal, to be timely, must be received at the Company's
principal executive offices not less than 120 calendar days in advance of the one year anniversary of the date the Company's proxy statement was released
to stockholders in connection with the previous year's Annual Meeting of Stockholders; except that (i) if no annual meeting was held in the previous year, (ii)
if the date of the annual meeting has been changed by more than thirty calendar days from the date contemplated at the time of the previous year's proxy
statement, or (iii) in the event of a special meeting, then notice must be received not later than the close of business on the tenth day following the day on
which notice of the date of the meeting was mailed or public disclosure of the meeting date was made.
Proposals of stockholders intended to be presented at the next Annual Meeting of Stockholders of the Company (i) must be received
by the Company at its offices no later than December 23, 2008, and (ii) must satisfy the conditions established by the Securities and Exchange Commission
for stockholder proposals to be included in the Company's Proxy Statement for that meeting.