SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
(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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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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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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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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Amount Previously Paid:
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7.
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Form, Schedule or Registration Statement No.:
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ENDWAVE CORPORATION
130 Baytech Drive
San Jose, California 95134
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On July 22, 2009
Dear
Stockholder
:
You are cordially invited to attend the Annual Meeting of Stockholders of Endwave Corporation,
a Delaware corporation. The meeting will be held on Wednesday, July 22 at 8:00 a.m. local time at
130 Baytech Drive, San Jose, California, for the following purposes:
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1.
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To elect our Board of Directors two nominees as directors to hold
office until the 2012 Annual Meeting of Stockholders and their successors are duly
elected and qualified;
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2.
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To ratify the selection by the Audit Committee of the Board of
Directors of Burr, Pilger & Mayer LLP as our independent registered public
accounting firm for the fiscal year ending December 31,
2009
; and
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3.
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To conduct any other business properly brought before the meeting.
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These items of business are more fully described in the Proxy Statement accompanying this
Notice.
The record date for the Annual Meeting is May 29, 2009. Only stockholders of record at the
close of business on that date may vote at the meeting or any adjournment thereof.
We will not mail printed proxy materials to most of our stockholders. If you are one of these
stockholders, you will have received a notice informing you of the availability of proxy materials
and also providing you with instructions on how to vote your shares. Certain of our stockholders,
including all stockholders of record and all stockholders that have elected to receive printed
proxy materials will receive a printed set of proxy materials and a printed proxy card. All
stockholders will have the ability to access the proxy materials electronically. We intend to
commence mailing to all of our stockholders either a notice or printed proxy materials on or about
June 12, 2009.
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By Order of the Board of Directors
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Curt P. Sacks
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Corporate Secretary
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San Jose, California
June 8, 2009
You are cordially invited to attend the meeting in person. Whether or not you expect to attend the
meeting, please vote your shares either by voting electronically or by completing and returning a
proxy card as promptly as possible in order to ensure your representation at the meeting. Even if
you have voted by proxy, you may still vote in person if you attend the meeting. Please note,
however, that if your shares are held of record by a broker, bank or other nominee and you wish to
vote at the meeting, you must obtain a proxy issued in your name from that record holder.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held
on July 22, 2009 at 8:00 a.m. local time at 130 Baytech Drive, San Jose, California.
The proxy materials are available electronically at https://materials.proxyvote.com/29264A.
Table of Contents
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ENDWAVE CORPORATION
130 Baytech Drive
San Jose, California 95134
PROXY STATEMENT
FOR THE 2009 ANNUAL MEETING OF STOCKHOLDERS
July 22, 2009
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
Why did I receive either a Notice of Internet Availability of Proxy Materials or printed proxy
materials in the mail?
We will not mail printed proxy materials to most of our stockholders. If you are one of these
stockholders, you will have received a Notice of Internet Availability of Proxy Materials (the
Notice) informing you of the availability of proxy materials and also providing you with
instructions on how to vote your shares. Certain of our stockholders, including all stockholders
of record and all stockholders that have elected to receive printed proxy materials will receive a
printed set of proxy materials and a printed proxy card. All stockholders will have the ability to
access the proxy materials electronically. We intend to commence mailing to all of our
stockholders either a notice or printed proxy materials on or about June 12, 2009.
We have made these proxy materials available because the Board of Directors of Endwave
Corporation (sometimes referred to as the Company or Endwave) is soliciting your proxy to vote
at the
2009
Annual Meeting of Stockholders. You are invited to attend the annual meeting
to vote on the proposals described in this proxy statement. However, you do not need to attend the
meeting to vote your shares. Instead, you may follow the voting instructions in the Notice or
simply complete, sign and return the printed proxy card that you received.
How do I attend the annual meeting?
The meeting will be held on Wednesday, July 22 at 8:00 a.m. local time at 130 Baytech Drive,
San Jose, California. Information on how to vote in person at the annual meeting is discussed
below.
Who can vote at the annual meeting?
Only stockholders of record at the close of business on May 29, 2009 will be entitled to vote
at the annual meeting. On this record date, there were 9,492,689
shares of common stock
and 300,000 shares of Series B Preferred Stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If on May 29, 2
009
your shares were registered directly in your name with Endwaves
transfer agent, Computershare Trust Company, then you are a stockholder of record. As a stockholder
of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to
attend the meeting, we urge you to fill out and return the enclosed proxy card to ensure your vote
is counted.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If on May 29
, 2009
your shares were held, not in your name, but rather in an account
at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner
of shares held in street name. The organization holding your account is considered to be the
stockholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have
the right to direct your broker or other agent regarding how to vote the shares in your account.
You are also invited to attend the annual meeting. However, since you are not the stockholder of
record, you may not vote your shares in person at the meeting unless you request and obtain a valid
proxy from your broker or other agent.
2.
Most beneficial owners will have received a copy of the Notice in the mail. The Notice will
provide you with instructions on accessing proxy materials electronically, requesting written proxy
materials if you desire and voting your shares. Please follow the instructions in the Notice to
ensure your vote is counted.
Some beneficial owners will have received printed proxy materials and a printed proxy card in
lieu of the Notice. If that is the case, simply complete and mail the proxy card to ensure your
vote is counted, or follow any other instructions on the proxy card.
What am I voting on?
There are two matters scheduled for a vote:
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Election of our Board of Directors two nominees as directors to hold office until
the 2012 Annual Meeting of Stockholders and their successors are duly elected and
qualified; and
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Ratification of Burr, Pilger & Mayer LLP as our independent registered public
accounting firm for the fiscal year ending December 31, 2009.
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What if another matter is properly brought before the meeting?
The Board of Directors knows of no other matters that will be presented for consideration at
the Annual Meeting. If any other matters are properly brought before the meeting, it is the
intention of the persons named in the accompanying proxy to vote on those matters in accordance
with their best judgment.
How do I vote?
You may either vote For all the nominees to the Board of Directors or you may Withhold
your vote for any nominee you specify. For each of the other matters to be voted on, you may vote
For or Against or abstain from voting. The procedures for voting are fairly simple:
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in person at the annual meeting or vote by
proxy using the enclosed proxy card. Whether or not you plan to attend the meeting, we urge you to
vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person
even if you have already voted by proxy.
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To vote in person, come to the annual meeting and we will give you a ballot when you
arrive.
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To vote using the proxy card, simply complete, sign and date the enclosed proxy card
and return it promptly in the envelope provided. If you return your signed proxy card
to us before the annual meeting, we will vote your shares as you direct.
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Beneficial Owner: Shares Registered in the Name of Broker or Bank
Most beneficial owners will have received a copy of the Notice in the mail. The Notice will
provide you with instructions on accessing proxy materials electronically, requesting written proxy
materials if you desire and voting your shares. Please follow the instructions in the Notice to
ensure your vote is counted.
Some beneficial owners will have received printed proxy materials and a printed proxy card in
lieu of the Notice. If that is the case, simply complete and mail the proxy card to ensure your
vote is counted, or follow any other instructions on the proxy card.
To vote in person at the annual meeting, you must obtain a valid proxy from your broker, bank,
or other agent. Follow the instructions from your broker or bank included with these proxy
materials, or contact your broker or bank to request a proxy form.
3.
How many votes do I have?
On each matter to be voted upon, you have one vote for each share of common
stock and ten votes for each share of Series B Preferred Stock you owned as of May 29, 2009.
What if I return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any voting selections, your shares
will be voted For the election of both nominees for director and For the ratification of the
selection of Burr, Pilger & Mayer LLP as our independent registered public accounting firm. If any
other matter is properly presented at the meeting, your proxyholder (one of the individuals named
on your proxy card) will vote your shares using his or her best judgment.
Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In addition to these proxy materials,
our directors and employees may also solicit proxies in person, by telephone, or by other means of
communication. Directors and employees will not be paid any additional compensation for soliciting
proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding
proxy materials to beneficial owners.
What does it mean if I receive more than one Notice or set of proxy materials?
If you receive more than one Notice or set of proxy materials, your shares may be registered
in more than one name or in different accounts. Please follow the voting instructions on the proxy
cards in the proxy materials or the Notice, as applicable, to ensure that all of your shares are
voted.
Can I change my vote after submitting my proxy?
Yes.
You can revoke your proxy at any time before the final vote at the meeting.
If you are the record holder of your shares, you may revoke your proxy in any one of three
ways:
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You may submit another properly completed proxy card with a later date.
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You may send a timely written notice that you are revoking your proxy to Endwaves
Corporate Secretary at 130 Baytech Drive, San Jose, California 95134.
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You may attend the annual meeting and vote in person. Simply attending the meeting
will not, by itself, revoke your proxy.
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If your shares are held by your broker or bank as a nominee or agent, you should follow the
instructions provided by your broker or bank.
When are stockholder proposals due for next years annual meeting?
To be considered for inclusion in next years proxy materials, your proposal must be submitted
in writing by February
12, 2010
, to our Corporate Secretary at 130 Baytech Drive, San
Jose, California 95134.
If you wish to submit a proposal that is not to be included in
next years proxy materials or nominate a director, you must do so no earlier than March 24, 2010
and no later than by April 23, 2010, or within such other period as is specified in our bylaws.
You are advised to review our bylaws, which contain additional requirements concerning stockholder
proposals and director nominations.
How are votes counted?
Votes will be counted by the inspector of election appointed for the meeting, who will
separately count For, Withhold and Against votes, abstentions and broker non-votes.
Abstentions will be counted towards the
4.
vote total for each proposal, and will have the same effect as Against votes. Broker
non-votes have no effect and will not be counted towards the vote total for any proposal.
If you are the beneficial owner of shares held by your broker as your nominee and you do not
give instructions to your broker, your broker can vote your shares with respect to discretionary
items, but not with respect to non-discretionary items. Discretionary items are proposals
considered routine under the rules of the New York Stock Exchange (NYSE) on which your broker
may vote shares held by it in the absence of your voting instructions. Non-discretionary items are
proposals considered non-routine under the rules of the NYSE, including those involving a contest
or a matter that may substantially affect the rights or privileges of shareholders, such as mergers
or shareholder proposals. On non-discretionary items for which you do not give your broker
instructions, the shares will be treated as broker non-votes.
How many votes are needed to approve each proposal?
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For Proposal No. 1, the election of two directors, the two nominees receiving the
most For votes from the holders of shares present in person or represented by proxy
and entitled to vote on the election of such directors will be elected. Only votes
For or Withheld will affect the outcome. Broker non-votes will have no effect.
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To be approved, Proposal No. 2, the ratification of the selection of Burr, Pilger &
Mayer LLP as our independent registered public accounting firm, must receive For
votes from the holders of a majority of votes present and entitled to vote either in
person or by proxy.
If you Abstain from voting, it will have the same
effect as an Against vote.
Broker non-votes will have no effect.
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What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if a
majority of the outstanding votes entitled to vote at the meeting are represented by stockholders
present at the meeting or by proxy. On the record date, there were 9,492,689
shares
of common stock and 300,000 shares of Series B Preferred Stock, representing 3,000,000 votes,
outstanding and entitled to vote. Thus, the holders of 6,246,345 votes must be present in person
or represented by proxy at the meeting to have a quorum.
Your shares will be counted towards the quorum only if you submit a valid proxy (or one is
submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the
meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there
is no quorum, either the Chairman of the Meeting or the holders of a majority of votes present at
the meeting in person or represented by proxy may adjourn the meeting to another date.
How can I find out the results of the voting at the annual meeting?
Preliminary voting results will be announced at the annual meeting. Final voting results will
be published in our quarterly report on Form 10-Q for the fiscal quarter ending September 30, 2009.
Are proxy materials available on the internet?
Proxy materials are available at https://materials.proxyvote.com/29264A.
5.
Proposal 1
Election Of Directors
Our Board of Directors (the Board) is divided into three classes, with each class having a
three-year term. Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting; except that the holders of our Series B
Preferred Stock, voting separately as a class, are entitled to elect one director.
Unless the Board determines otherwise, vacancies on the Board may be filled only by the
affirmative vote of a majority of the remaining directors. This includes vacancies created by an
increase in the number of directors. A director elected by the Board to fill a vacancy (including a
vacancy created by an increase in the authorized number of directors on the Board) shall serve for
the remainder of the full term of the class of directors in which the vacancy occurred and until
such directors successor is elected and has qualified or until the directors death, resignation
or removal.
The Board presently has six members. Each of the nominees named below is currently a director
of Endwave who was previously elected by our stockholders. There are two directors in the class
whose term of office expires in 2009. If elected at the annual meeting, each nominee would serve
until the 2012 Annual Meeting of Stockholders and until his successor is elected and has qualified,
or until the directors death, resignation or removal. It is our policy to encourage directors and
nominees for director to attend the annual meeting. All current directors who were serving as
directors at the time of the 2008 Annual Meeting of Stockholders attended the 2008 Annual Meeting
of Stockholders.
Shares represented by executed proxies will be voted, if authority to do so is not withheld,
for the election of the two nominees named below. In the event that the nominees should be
unavailable for election as a result of an unexpected occurrence, such shares will be voted for the
election of such substitute nominees as the Board may propose. The persons nominated for election
have agreed to serve if elected, and the Board has no reason to believe that these nominees will be
unable to serve.
The following is a brief biography of each nominee and each director whose term will continue
after the annual meeting. The age specified for each director is as of June 12, 2009.
Nominees for Election for a Three-year Term Expiring at the 2012 Annual Meeting of Stockholders
Edward A. Keible
Mr. Keible
, age 65, has served as our President and Chief Executive Officer and as a director
since January 1994. From 1973 until 1993, Mr. Keible held various positions at Raychem Corporation,
a materials science company, culminating in the position of Senior Vice President with specific
oversight of Raychems International and Electronics Groups. Mr. Keible holds a B.A. in engineering
sciences and a B.E. and an M.E. in materials science from Dartmouth College and an M.B.A. from
Harvard Business School. Mr. Keible served as a member of the Board of Directors of TechAmerica,
formerly the American Electronics Association, until May 2009.
Edward C.V. Winn
Mr. Winn
, age 70, has served as director of Endwave since July 2000. From March 1992 to
January 2000, Mr. Winn served in various capacities with TriQuint Semiconductor, Inc., a
semiconductor manufacturer, most recently as Executive Vice President, Finance and Administration
and Chief Financial Officer. Previously, Mr. Winn served in various capacities with Avantek, Inc.,
a microwave component and subsystem manufacturer, most recently as Product Group Vice President.
Mr. Winn received a B.S. in Physics from Rensselaer Polytechnic Institute and an M.B.A. from
Harvard Business School. Mr. Winn serves as a member of the Board of Directors of Volterra
Semiconductor Corporation.
The Board Of Directors Recommends
A Vote In Favor Of Each Named Nominee.
6.
Directors Continuing in Office Until the 2010 Annual Meeting of Stockholders
Joseph Lazzara
Mr. Lazzara
, age 57, has served as a director of Endwave since February 2004. From September
2006 to March 2008, Mr. Lazzara served as the Vice Chairman and a director of Omron Scientific
Technologies, Inc. (formerly known as Scientific Technologies, Inc. (NASDAQ: STIZ)), a
manufacturer of machine safeguarding products and automation sensors acquired by Omron Corporation,
a publicly traded Japanese corporation in September 2006. Prior to the acquisition of Scientific
Technologies, Mr. Lazzara served as the Chief Executive Officer between June 1993 and September
2006, as the President of Scientific Technologies between 1989 and 2006 and as the Treasurer and a
director of Scientific Technologies between 1984 and 2006. From 2006, Mr. Lazzara has also served
as the Vice Chairman and Director of Automation Products Group, Inc., a privately held manufacturer
of automation sensors. Mr. Lazzara served as a Vice President of Scientific Technologies between
September 1984 and June 1989. He also served as Treasurer and a director of Scientific
Technologies parent company, Scientific Technology Incorporation, from 1981 and 2006. Prior to
1981, Mr. Lazzara was employed by Hewlett-Packard Company, a global technology solutions provider,
in Process and Engineering Management. Mr. Lazzara received a B.S. in Engineering from Purdue
University and an M.B.A. from Santa Clara University.
Eric D. Stonestrom
Mr. Stonestrom
, age 47
,
has served as a director of Endwave since July 2006. Mr. Stonestrom
is currently President and Chief Executive Officer of Airspan Networks, a supplier of broadband
wireless equipment. Mr. Stonestrom joined Airspan at its inception in January 1998 as Executive
Vice President and Chief Operating Officer. In May 1998, he was named Airspans President and Chief
Executive Officer as well as a member of the Board of Directors. From 1995 to January 1998, Mr.
Stonestrom was employed by DSC Communications Corporation as a Vice President of operating
divisions, including the Airspan product line. From 1984 until 1995, Mr. Stonestrom worked at Bell
Laboratories and AT&T in a variety of positions. He received B.S., M.S. and M. Eng. degrees in
1982, 1983 and 1984, respectively, from the College of Engineering at the University of California
at Berkeley.
Directors Continuing in Office Until the 2011 Annual Meeting of Stockholders
John F. McGrath, Jr.
Mr. McGrath
, age 44
,
has served as a director of Endwave since January 2005. Mr. McGrath is
currently the Vice President and Chief Financial Officer for Network Equipment Technologies, a
manufacturer of data networking equipment for government and enterprise applications, a position he
has held since 2001. Prior to joining Network Equipment Technologies, Mr. McGrath was an
independent consultant to enterprise software firm Niku Corporation. From 1997 to 2000, Mr. McGrath
served in various financial capacities at Aspect Communications, including as Vice President of
Finance and Director of Finance for Europe, Middle East and Africa. Prior to that, he was Director
of Finance for TCSI Corporation. From 1986 to 1991, Mr. McGrath worked as a Manager in the High
Technology/Manufacturing Group at Ernst & Young LLP. Mr. McGrath holds a B.S. in Accounting from
the University of Wyoming and an M.B.A. from the Stanford Graduate School of Business and is a
registered C.P.A. in the state of California. Mr. McGrath serves as a member of the Board of
Directors of the Presidio Fund, a publicly traded mutual fund and Actel Corporation.
Wade Meyercord
Mr. Meyercord
, age 68, has served as a director of Endwave since March 2004. From 1987 to
present, Mr. Meyercord has served as President of Meyercord and Associates, a consulting firm
specializing in board of directors and executive compensation. From 1999 to 2002, Mr. Meyercord
served as Senior Vice President and Chief Financial Officer of RioPort.com, Inc., a company that
delivers an integrated, secure platform for acquiring, managing and experiencing music and spoken
audio programming from the Internet. From 1998 to 1999, Mr. Meyercord Served as Senior Vice
President, e-commerce of Diamond Multimedia. Prior to 1998, Mr. Meyercord held various management
and/or executive level positions with Read-Rite Corporation, Memorex Corporation and IBM
Corporation. Mr. Meyercord received a B.S. in mechanical engineering from Purdue University and an
M.B.A. in engineering administration from Syracuse University. Mr. Meyercord serves as a member of
the Board of Directors of Microchip and California Micro Devices.
7.
Meetings of the Board of Directors
The Board met five times during 2008. Each Board member attended 75% or more of the aggregate
of the meetings of the Board and of the committees on which he served, held during the period for
which he was a director or committee member.
Independence of the Board of Directors
As required under the Nasdaq Stock Market
(
Nasdaq
)
listing standards, a
majority of the members of our Board of Directors must qualify as independent, as affirmatively
determined by the Board. The Board consults with our counsel to ensure that the Boards
determinations are consistent with relevant securities and other laws and regulations regarding the
definition of independent, including those set forth in pertinent listing standards of the
Nasdaq, as in effect time to time.
Consistent with these considerations, after review of all relevant identified transactions or
relationships between each director, or any of his or her family members, and Endwave, its senior
management and its independent auditors, the Board has affirmatively determined that the following
five directors are independent directors within the meaning of the applicable Nasdaq listing
standards: Mr. Winn, Mr. Meyercord, Mr. Lazzara, Mr. McGrath and Mr. Stonestrom. In making this
determination, the Board found that none of these directors had a material or other disqualifying
relationship with Endwave. Mr. Keible, our President and Chief Executive Officer, is not an
independent director by virtue of his employment with us.
As required under applicable Nasdaq listing standards, in 2008, our independent directors met
five times in regularly scheduled executive sessions at which only independent directors were
present. Each executive session was led by Mr. Winn. Persons interested in communicating with the
independent directors with their concerns or issues may address correspondence to a particular
director, or to the independent directors generally, in care of Endwave Corporation at 130 Baytech
Drive, San Jose, California 95134. If no particular director is named, letters will be forwarded,
depending on the subject matter, to the Chairman of the Board or the Chairpersons of the Audit,
Compensation, or Nominating and Governance Committees.
Information Regarding the Board of Directors and Its Committees
The Board has three committees:
an Audit Committee, a Compensation Committee and a
Nominating and Governance Committee.
The following table provides membership and meeting
information for fiscal 2008 for each of the Board committees:
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Nominating and
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Name
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Audit
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Compensation
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Governance
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Edward A. Keible, Jr.
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Joseph Lazzara
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X
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X
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X
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John F. McGrath, Jr.
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X
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*
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Wade Meyercord
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X
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*
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X
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Eric D. Stonestrom
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X
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X
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Edward C.V. Winn
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X
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X
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X
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Total meetings in fiscal 2008
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9
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2
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2
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Below is a description of each committee of the Board. Each of the committees has authority to
engage legal counsel or other experts or consultants, as it deems appropriate, to carry out its
responsibilities. The Board has determined that each member of each committee meets the applicable
rules and regulations regarding
8.
independence and that each member is free of any relationship that would interfere with his
or her individual exercise of independent judgment with regard to us.
Audit Committee
The Audit Committee of the Board of Directors was established by the Board in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the Exchange Act), to
oversee our corporate accounting and financial reporting processes and audits of our financial
statements.
For this purpose, the Audit Committee performs several functions.
The
Audit Committee evaluates the performance of and assesses the qualifications of the independent
registered public accounting firm; determines and approves the engagement of the independent
registered public accounting firm; determines whether to retain or terminate the existing
independent registered public accounting firm or to appoint and engage a new independent registered
public accounting firm; reviews and approves the retention of the independent registered public
accounting firm to perform any proposed permissible non-audit services; monitors the rotation of
partners of the independent registered public accounting firm on our audit engagement team as
required by law; confers with management and the independent registered public accounting firm
regarding the effectiveness of internal controls over financial reporting; establishes procedures,
as required under applicable law, for the receipt, retention and treatment of complaints received
by us regarding accounting, internal accounting controls or auditing matters and the confidential
and anonymous submission by employees of concerns regarding questionable accounting or auditing
matters; and meets to review our annual audited financial statements and quarterly financial
statements with management and the independent registered public accounting firm, including
reviewing our disclosures under Managements Discussion and Analysis of Financial Condition and
Results of Operations. The Audit Committee is composed of three non-employee directors: Messrs.
Lazzara, McGrath (Chairman) and Winn. The Audit Committee has adopted a written charter that is
available to stockholders on our website at www.endwave.com.
The Board of Directors annually reviews the Nasdaq listing standards definition of
independence for Audit Committee members and has determined that all members of our Audit Committee
are independent (as independence is currently defined in Rule 4350(d)(2)(A)(i) and (ii) of the
Nasdaq
listing standards). The Board of Directors has also determined that each of Mr.
Winn and Mr. McGrath qualifies as an audit committee financial expert, as defined in applicable
rules promulgated by the Securities and Exchange Commission, or the SEC. The Board made a
qualitative assessment of each of Mr. Winns and Mr. McGraths level of knowledge and experience
based on a number of factors, including their respective formal education and experience as chief
financial officers for public reporting companies.
Compensation Committee
The Compensation Committee of our Board of Directors reviews and approves our overall
compensation strategy and policies. The Compensation Committee reviews and approves corporate
performance goals and objectives relevant to the compensation of our executive officers and other
senior management; reviews and approves the compensation and other terms of employment of our Chief
Executive Officer; reviews and approves the compensation and other terms of employment of our other
officers; and administers our stock option and purchase plans, pension and profit sharing plans,
stock bonus plans, deferred compensation plans and other similar programs. The Compensation
Committee is composed of four non-employee directors: Messrs. Lazzara, Meyercord (Chairman),
Stonestrom and Winn. All current members of our Compensation Committee are independent within the
meaning of Rule 4200(a)(15) of the NASDAQ listing standards.
The Compensation Committee
has adopted a written charter that is available to stockholders on our website at
www.endwave.com.
The responsibilities of the Compensation Committee, as stated in its charter, include the
following:
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developing compensation policies that will attract and retain the highest quality
executives, that will clearly articulate the relationship of corporate performance to
executive compensation and will reward executives for Endwaves progress;
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proposing to the Board of Directors the adoption, amendment and termination of stock
option plans, stock appreciation rights plans, pension and profit sharing plan, stock
bonus plans, stock purchase plans, bonus plans, deferred compensation plans and other
similar plans;
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9.
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granting rights, participation and interests in such plans to eligible participants,
subject in certain cases to ratification by the Board; and
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reviewing and approving such other compensation matters as may be necessary or
appropriate in view of the Compensation Committees overall responsibility.
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Our Compensation Committee plays an integral role in setting executive officer compensation
each year. In the first quarter of each year, our Compensation Committee holds a regular meeting
in which our Chief Executive Officer and Chief Financial Officer review with the Compensation
Committee Endwaves financial and business performance for the previous year and managements
business outlook and operating plan for the current year. In reviewing the prior years
performance, the Compensation Committee compares our performance to the financial and operational
goals set for such year and the bonus targets. In this meeting, the Chief Executive Officer also
reviews with the Compensation Committee his assessment of the individual performance of each
executive officer, including his own performance, according to a variety of qualitative performance
criteria and salary and bonus trends. In addition, during the fourth quarter of each year, the
Chairman of the Compensation Committee discusses with the full Board, recent data and current
trends in equity ownership programs for comparable companies. Taking into account the information
conveyed and discussed at these meetings and the recommendations of our Chief Executive Officer,
the Compensation Committee then determines, subject in some cases to ratification by the full Board
of Directors:
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the amount of bonus to be awarded to each executive officer in respect of the prior
years performance;
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whether to raise, lower or maintain the executive officers base salary for the
current year;
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the bonus targets to be set for the executive officers for the current year; and
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option grants, if any, to be awarded to each executive officer.
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Each year, the Compensation Committee also reviews with management our Compensation Discussion
and Analysis (CD&A) and considers whether to recommend that it be included in
proxy
statements and other filings.
Nominating and Governance Committee
The Nominating and Governance Committee of the Board of Directors is responsible for
identifying, reviewing and evaluating candidates to serve as our directors consistent with criteria
approved by the Board; reviewing and evaluating incumbent directors, recommending candidates for
election to the Board of Directors; making recommendations to the Board regarding the membership of
the committees of the Board; and assessing the performance of management and our Board of
Directors. The Nominating and Governance Committee is composed of four non-employee directors:
Messrs. Lazzara (Chairman), Meyercord, Stonestrom and Winn. All members of the Nominating and
Governance Committee are independent (as independence is currently defined in Rule 4200(a)(15) of
the Nasdaq listing standards). The Nominating and Governance Committee has adopted a written
charter that is available to stockholders on our website and www.endwave.com.
The Nominating and Governance Committee believes that candidates for director should have
certain minimum qualifications, including being able to read and understand basic financial
statements and having the highest personal and professional integrity and ethics. The Nominating
and Governance Committee will seriously consider only those candidates who have demonstrated
exceptional ability and judgment and who are expected to be effective, in connection with the other
nominees to the Board, in providing the skills and expertise appropriate for us and serving the
long-term interests of our stockholders. However, the Nominating and Governance Committee retains
the right to modify these qualifications from time to time. Candidates for director nominees are
reviewed in the context of the current composition of the Board, our operating requirements and the
long-term interests of stockholders. In conducting this assessment, the Nominating and Governance
Committee considers diversity, age, skills and such other factors as it deems appropriate, given
the current needs of Endwave and the Board, to maintain a balance of knowledge, experience and
capability. In the case of incumbent directors whose terms of office are set to expire, the
Nominating and Governance Committee reviews such directors overall service to Endwave during their
term, including the number of meetings attended, level of participation, quality of performance,
and any other
10.
relationships and transactions that might impair such directors independence. In the case of
new director candidates, the Nominating and Governance Committee also determines whether the
nominee must be independent for Nasdaq purposes, which determination is based upon applicable
Nasdaq listing standards, applicable rules and regulations promulgated by the SEC and the advice of
counsel, if necessary. The Nominating and Governance Committee then uses its network of contacts to
compile a list of potential candidates, but may also engage, if it deems appropriate, a
professional search firm. The Nominating and Governance Committee conducts any appropriate and
necessary inquiries into the backgrounds and qualifications of possible candidates after
considering the function and needs of the Board. The Nominating and Governance Committee meets to
discuss and consider such candidates qualifications and then selects a nominee for recommendation
to the Board by majority vote. In fiscal 2008, the Nominating and Governance Committee paid no fees
to any outside entity or director to assist in the process of identifying or evaluating director
candidates.
The Nominating and Governance Committee will consider any qualified director candidates
recommended by stockholders. The Nominating and Governance Committee does not intend to alter the
manner in which it evaluates candidates, including the minimum criteria set forth above, based on
whether or not the candidate was recommended by a stockholder. Stockholders who wish to recommend
individuals for consideration by the Nominating and Governance Committee to become nominees for
election to the Board may do so by delivering a written recommendation to the Nominating and
Governance Committee at 130 Baytech Drive, San Jose, California
95134
no sooner than
120
days and no later than 90 days prior to the first anniversary of the most recent
Annual Meeting of Stockholders. Submissions must include the full name of the proposed nominee, a
description of the proposed nominees business experience for at least the previous five years,
complete biographical information, a description of the proposed nominees qualifications as a
director and a representation that the nominating stockholder is a beneficial or record holder of
our stock and has been a holder for at least one year. Any such submission must be accompanied by
the written consent of the proposed nominee to be named as a nominee and to serve as a director if
elected.
Stockholder Communications With The Board
The Board has adopted a formal process by which stockholders may communicate with the Board or
any of its directors. Stockholders who wish to communicate with the Board may do so by sending
written communications addressed to the Corporate Secretary of Endwave Corporation at 130 Baytech
Drive, San Jose, California 95134. These communications will be reviewed by one or more employees
of the Company designated by the Board, who will determine whether they should be presented to the
Board. The purpose of this screening is to allow the Board to avoid having to consider irrelevant
or inappropriate communications (such as advertisements, solicitations and hostile communications).
The screening procedures have been approved by a majority of the independent Directors of the
Board
.
All communications directed to the Audit Committee in accordance with our Code of
Business Conduct and Ethics
that relate to questionable accounting or auditing matters
involving Endwave will be promptly and directly forwarded to the Audit Committee without screening.
Code Of Business Conduct and Ethics
We have adopted the Endwave Corporation Code of Business Conduct and Ethics that applies to
all officers, directors and employees. The Endwave Corporation Code of Business Conduct and Ethics
is available on our website at www.endwave.com. We will post on our website any amendments to this
code or any waivers of this code that apply to directors or executive officers.
11.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
1
The Audit Committee has reviewed and discussed the audited consolidated financial statements
for the fiscal year ended December 31, 2008
with our management.
The Audit
Committee has discussed with the independent registered public accounting firm the matters required
to be discussed by Statement on Auditing Standards No. 114,
The Auditors Communication with Those
Charged With Governance
, as adopted by the Public Company Accounting Oversight Board (PCAOB) in
Rule 3200T.
The Audit Committee has also received the written disclosures and the letter
from the independent registered public accounting firm required by applicable requirements of the
PCAOB regarding the independent registered public accounting firms communications with the audit
committee concerning independence, and has discussed with the independent registered public
accounting firm the independent registered public accounting firms independence.
Based on
the foregoing, the Audit Committee has recommended to the Board of Directors that the audited
consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2008.
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Audit Committee
Mr. John F. McGrath (Chairperson)
Mr. Joseph Lazzara
Mr. Edward C. V. Winn
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1
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The material in this report is not soliciting
material, is not deemed filed with the Securities and Exchange Commission
and is not to be incorporated by reference in any of our filings under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
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12.
Proposal 2
Ratification Of Selection Of Independent Registered Public Accounting Firm
The Audit Committee of the Board of Directors has selected Burr, Pilger & Mayer LLP (BPM) as
our independent registered public accounting firm for the fiscal year ending December 31, 2009 and
has further directed that management submit the selection of the independent registered public
accounting firm for ratification by the stockholders at the annual meeting. BPM has audited our
financial statements since 2005. Representatives of BPM are expected to be present at the annual
meeting. They will have an opportunity to make a statement if they so desire and will be available
to respond to appropriate questions.
Neither our bylaws nor other governing documents or law require stockholder ratification of
the selection of BPM as our independent registered public accounting firm. However, the Audit
Committee of the Board is submitting the selection of BPM to the stockholders for ratification as a
matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit
Committee of the Board will reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee of the Board in its discretion may direct the appointment of a
different independent registered public accounting firm at any time during the year if they
determine that such a change would be in the best interests of Endwave and its stockholders.
The affirmative vote of the holders of a majority of the votes present in person or
represented by proxy and entitled to vote at the annual meeting will be required to ratify the
selection of
BPM
. Abstentions will be counted toward the tabulation of votes cast on
proposals presented to the stockholders and will have the same effect as negative votes. Broker
non-votes are counted towards a quorum, but are not counted for any purpose in determining whether
this matter has been approved.
Independent Registered Accounting Firms Fees
The following table shows the fees paid or accrued by Endwave for the audit and other services
provided by BPM for fiscal 2007 and 2008 (in thousands):
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2007
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2008
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Audit Fees(1)
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$
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543
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$
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382
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Audit-Related Fees(2)
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13
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Tax Fees
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All Other Fees
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Total
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$
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556
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$
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382
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(1)
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Audit fees represent fees for professional services provided in
connection with the audit of our annual consolidated financial
statements, review of our quarterly condensed consolidated financial
statements and services that are normally provided by Burr, Pilger &
Mayer LLP in connection with statutory and regulatory filings or
engagements.
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(2)
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Audit-related fees consist of assurance and related services that are
reasonably related to the performance of the audit or review of our
consolidated financial statements and are not reported above under
audit fees. The services provided for the fees disclosed under this
category include due diligence and accounting consultations in
connection with acquisitions.
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Independence of Independent Registered Public Accounting Firm and Pre-Approval Policy
Our Audit Committee has determined that the provision by BPM of non-audit services is
compatible with maintaining the independence of BPM. The Audit Committee has adopted a policy for
the pre-approval of audit and non-audit services rendered by our independent registered public
accounting firm. The policy generally pre-approves specified services in the defined categories of
audit services, audit-related services and tax services for up to $5,000. Pre-approval may also be
given as part of the Audit Committees approval of the scope of the engagement of the independent
registered public accounting firm or on an individual explicit case-by-case basis before the
independent registered public accounting firm is engaged to provide each service. The pre-approval
of
13.
services may be delegated to one or more of the Audit Committees members, but the decision
must be reported to the full Audit Committee at its next scheduled meeting. During fiscal 2008, all
services provided by BPM were pre-approved by the Audit Committee.
The Board Of Directors Recommends
A Vote In Favor Of Proposal 2
.
14.
Security Ownership Of
Certain Beneficial Owners And Management
The following table sets forth certain information regarding the ownership of our common stock
as of May 15, 2009 by: (i) each of our named executive officers; (ii) each director; (iii) our
executive officers and directors as a group; and (iv) all those known by us to be beneficial owners
of more than five percent of our common stock. Except as otherwise indicated, the address of each
of the persons set forth below is c/o Endwave Corporation, 130 Baytech Drive, San Jose, California
95134.
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Shares Beneficially Owned(1)
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Series B Preferred
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Common Stock
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Stock
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Name and Address
|
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Number
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Percent(2)
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Number
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Percent(2)
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Entities affiliated with Oak Management
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3,000,000
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24.08
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%
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300,000
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100.00
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%
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Corporation, XI, LLC(3)
One Gorham Island
Westport, CT 06880
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Entities affiliated with Potomac Capital
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1,516,586
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16.03
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Management(4)
825 Third Avenue
New York, NY 10022
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Entities affiliated with EagleRock
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1,217,682
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12.87
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Capital Management(5)
551 Fifth Avenue, 34th Floor
New York, NY 10176
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Pate Capital Partners, LP(6)
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700,000
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7.40
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555 Montgomery Street, Ste. 603
San Francisco, CA 94111
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Entities affiliated with Dimensional
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704,245
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7.45
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Fund Advisors LP(7)
1299 Ocean Ave.
Santa Monica, CA 90401
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Entities affiliated with Portolan Capital Management, LLC (8)
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437,369
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4.62
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George McCabe
2 International Place, FL 26
Boston, MA 02110
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Edward A. Keible, Jr.(9)
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668,911
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7.07
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John J. Mikulsky(10)
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328,182
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3.47
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Brett W. Wallace(11)
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246,081
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2.60
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Daniel P. Teuthorn(12)
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138,773
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1.47
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Steven F. Layton(13)
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140,627
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1.49
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David M. Hall(14)
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167,833
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1.77
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Edward C.V. Winn(15)
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37,364
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|
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*
|
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|
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Joseph J. Lazzara(16)
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43,716
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*
|
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John F. McGrath, Jr.(15)
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43,966
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*
|
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Wade Meyercord(15)
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43,016
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|
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*
|
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Eric Stonestrom(15)
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32,249
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|
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*
|
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|
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All directors and executive officers as a group (11 persons)(17)
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1,890,718
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19.99
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15.
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*
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Less than one percent.
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(1)
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This table is based upon information supplied to us by our officers, directors and principal
stockholders and upon any Schedules 13D or 13G filed with the Securities and Exchange. Unless otherwise
indicated in the footnotes to this table, and subject to community property laws where applicable, we
believe that each of the stockholders named in this table has sole voting and investment power with
respect to the shares indicated as beneficially owned.
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(2)
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Applicable percentages are based on 9,458,575 shares outstanding on May 15, 2009, adjusted as required
by rules promulgated by the Securities and Exchange Commission.
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(3)
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300,000 shares of Series B Stock are held of record by Oak Investment Partners XI, Limited Partnership,
a Delaware limited partnership (Oak Investment Partners XI,). Oak Associates XI LLC, a Delaware
limited liability company (Oak Associates XI), is the general partner of Oak Investment Partners XI
and as such may be deemed to beneficially own the shares held by Oak Investment XI. Oak Management
Corporation, a Delaware corporation (Oak Management), is the investment advisor to Oak Investment
Partners XI and as such may be deemed to beneficially own the shares held by Oak Investment XI. Bandel
L. Carano, Gerald R. Gallagher, Edward F. Glassmeyer, Fredric W. Harman, Ann H. Lamont and David B.
Walrod are general partners, managing members, shareholders, directors and/or officers of Oak Investment
XI and as such may be deemed to beneficially own the shares held by Oak Investment XI. The number of
shares of Series B Stock previously beneficially owned by Oak Investment XI for 90,000 shares of Series
B Stock expired on April 26, 2009. The number of shares beneficially owned by Oak Investment XI
includes 3,000,000 shares of common issuable within 60 days of the date of this table upon conversion of
300,000 shares of Series B Stock beneficially owned by Oak Investment XI.
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(4)
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Potomac Capital Partners LP is a private investment partnership formed under the laws of the State of
Delaware. Potomac Capital Management LLC is the General Partner of Potomac Capital Partners LP. Mr. Paul
J. Solit is the Managing Member of Potomac Capital Management LLC.
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(5)
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The shares are held by EagleRock Master Fund, L.P. (ERMF) and EagleRock Institutional Partners LP
(ERIP). EagleRock Capital Management, LLC (EagleRock) is the investment manager of ERMF and ERIP and
has sole power to vote and dispose of the shares held by ERMF and ERIP and may be deemed to beneficially
own such shares. Nader Tavakoli is the Manager of EagleRock and may direct the voting and disposition of
the shares held by ERMF and ERIP and may be deemed to beneficially own such shares.
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(6)
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The shares are beneficially held by Pate Capital Partners, LP . Bruce A. Pate, General Partner has the
sole power to vote or direct the vote of said shares. In addition, Mr. Bruce A. Pate has the sole power
to dispose or to direct the disposition of said shares.
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(7)
|
|
Dimensional Fund Advisors LP (formerly, Dimensional Fund Advisors, Inc.) (Dimensional), an investment
advisor registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice
to four investment companies registered under the Investment Company Act of 1940, and serves as
investment manager to certain other commingled group trusts and separate accounts. These investment
companies, trusts and accounts are the Funds. In its role as investment advisor or manager,
Dimensional possesses investment and/or voting power over the securities of the Issuer described in this
schedule that are owned by the Funds, and may be deemed to be the beneficial owner of the shares of the
Issuer held by the Funds. However, all securities reported are owned by the Funds. Dimensional disclaims
beneficial ownership of such securities. Mr. Christopher Crossan, Global Chief Compliance Officer, is a
General Partner of Dimensional Holdings Inc.
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(8)
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|
Portolan Capital Management, LLC, an unregistered investment adviser beneficially own directly shares of
common stock of the Issuer in its capacity as investment manager for various clients, and indirectly by
George McCabe, the Manager of Portolan Capital Management, LLC. Portolan Capital Management, LLC and
Mr. McCabe are sometimes individually referred to herein as a Reporting Person and collectively as the
Reporting Persons.
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(9)
|
|
Includes 526,313 shares issuable upon exercise of options exercisable within 60 days of the date of this
table. If exercised in full within 60 days of the date of this table, 275,343 shares would be subject to
repurchase by us. Also includes 142,598 shares held by the Keible Family Trust, of which Mr. Keible is
co-trustee.
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16.
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|
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(10)
|
|
Includes 259,677 shares issuable upon exercise of options exercisable within 60 days of the date of this
table. If exercised in full within 60 days of the date of this table, 121,564 shares would be subject to
repurchase by us. Also includes 600 shares owned by Mr. Mikulskys daughter.
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(11)
|
|
Includes 240,000 shares issuable upon exercise of options exercisable within 60 days of the date of this
table. If exercised in full within 60 days of the date of this table, 107,500 shares would be subject to
repurchase by us.
|
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(12)
|
|
Includes 112,501 shares issuable upon exercise of options exercisable within 60 days of the date of this
table. If exercised in full within 60 days of the date of this table, 54,983 shares would be subject to
repurchase by us.
|
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(13)
|
|
Includes 137,324 shares issuable upon exercise of options exercisable within 60 days of the date of this
table. If exercised in full within 60 days of the date of this table, 60,783 shares would be subject to
repurchase by us.
|
|
(14)
|
|
Includes 155,000 shares issuable upon exercise of options exercisable within 60 days of the date of this
table. If exercised in full within 60 days of the date of this table, 55,314 shares would be subject to
repurchase by us.
|
|
(15)
|
|
Represents shares issuable upon exercise of options exercisable within 60 days of the date of this table.
|
|
(16)
|
|
Includes 42,716 shares issuable upon exercise of options exercisable within 60 days of the date of this
table. Also includes 1,000 shares owned jointly by Joseph J. and Nancy B. Lazzara.
|
|
(17)
|
|
See footnotes 9 through 16 above, as applicable. Includes 1,630,126 shares issuable upon exercise of
options exercisable within 60 days of the date of this table. If exercised in full within 60 days of the
date of this table, 675,487 shares would be subject to a repurchase right by us.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons
who own more than ten percent of a registered class of our equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of our common stock and other
equity securities. Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of such reports furnished to the
Company and written representations that no other reports were required, during the fiscal year
ended December 31, 2008, all Section 16(a) filing requirements applicable to our officers,
directors and greater than ten percent beneficial owners were complied with, except that one
report, covering four transactions, was filed late by Potomac Capital Management, LLC and four
reports, covering 33 transactions, were filed late by EagleRock Capital Management, LLC.
17.
Compensation
Overview
Our primary objectives with respect to executive compensation are to attract and retain the
best possible executive talent, to link annual cash compensation and long-term stock-based
compensation to achievement of measurable corporate goals and individual performance, and to align
executives incentives with stockholder value creation. To achieve these objectives, we have
implemented and maintain compensation plans that tie a substantial portion of executives overall
compensation to our financial performance and common stock price. Overall, the total compensation
opportunity is intended to create an executive compensation program that is competitive with
comparably-sized companies, as it is these companies with whom we compete most vigorously for
executive and technical talent. We refer to these companies in this compensation discussion and
analysis as comparable companies.
Role of Compensation Committee and Chief Executive Officer
Our Compensation Committee approves, administers and interprets our executive compensation and
benefit policies and plans. Our Compensation Committee is appointed by our Board of Directors, and
consists entirely of directors who are outside directors for purposes of Section 162(m) of the
Internal Revenue Code and non-employee directors for purposes of Rule 16b-3 under the Exchange
Act. Our Compensation Committee is comprised of Mr. Wade Meyercord, Mr. Joseph J. Lazzara, Mr. Eric
D. Stonestrom and Mr. Edward C.V. Winn. Our Compensation Committee is chaired by Mr. Meyercord,
President of Meyercord and Associates, a consulting firm specializing in executive compensation.
Our Compensation Committee has primary responsibility for ensuring that our executive
compensation and benefit program is consistent with our compensation philosophy and corporate
governance guidelines and is responsible for determining the executive compensation packages
offered to our executive officers. The responsibilities of the Compensation Committee, as stated
in its charter, include the following:
|
|
|
Developing compensation policies that will attract and retain the highest quality
executives, will clearly articulate the relationship of corporate performance to
executive compensation and will reward executives for Endwaves progress;
|
|
|
|
|
Proposing to the Board of Directors the adoption, amendment and termination of stock
option plans, stock appreciation rights plans, pension and profit sharing plan, stock
bonus plans, stock purchase plans, bonus plans, deferred compensation plans and other
similar plans;
|
|
|
|
|
Granting rights, participation and interests in such plans to eligible participants,
subject in certain cases to ratification by the Board of Directors; and
|
|
|
|
|
Reviewing and approving such other compensation matters as may be necessary or
appropriate in view of the Compensation Committees overall responsibility.
|
Our Compensation Committee plays an integral role in setting executive officer compensation
each year. During the fourth quarter of each year, the Chairman of the Compensation Committee
discusses with the full Board recent data and current trends in equity ownership programs for
comparable companies. In the first quarter of the following year, our Compensation Committee holds
a regular meeting in which our Chief Executive Officer and Chief Financial Officer review with the
Compensation Committee Endwaves financial and business performance for the prior year and
managements business outlook and operating plan for the current year. In reviewing the prior
years performance, the Compensation Committee compares our performance to the financial and
operational goals set for such year and the bonus targets set for such year. In this meeting, the
Chief Executive Officer also reviews with the Compensation Committee his assessment of the
individual performance of each executive officer, including his own performance, according to a
variety of qualitative performance criteria and salary and bonus trends. Taking into account the
information conveyed and discussed at these meetings and the recommendations of our Chief Executive
Officer, the Compensation Committee then determines, subject in some cases to ratification by the
full Board of Directors:
18.
|
|
|
The amount of bonus to be awarded to each executive officer in respect of the prior
years performance;
|
|
|
|
|
Whether to raise, lower or maintain the executive officers base salary for the
current year;
|
|
|
|
|
The bonus targets to be set for the executive officers for the current year; and
|
|
|
|
|
Option grants, if any, to be awarded to each executive officer.
|
Each element of our executive compensation system is described in more detail below.
Comparable Company Comparisons
Each year, the Compensation Committee reviews the executive compensation programs and amounts
at comparable companies. Endwaves total cash compensation packages, based on achievement of target
bonuses at the 100% level, are designed to be at the median of total target cash compensation among
comparable companies for median performance by comparable executives. Our equity compensation
program is designed to provide a percentage ownership of Endwave that is comparable to the median
percentage ownership among these comparable companies. However, the individual elements of our
executive program (base salary, annual incentive compensation, equity compensation and benefits)
may vary from group medians as the Compensation Committee or the Board of Directors deems
appropriate.
Since our initial public offering in 2000, the Compensation Committee has studied comparable
companies to calibrate executive compensation. For this purpose, for 2008, the Compensation
Committee looked at companies with more than $50 million but less than $200 million in annual
revenues as described in the quarterly executive salary survey published by Radford Surveys +
Consulting, a unit of Aon Consulting (Radford). We believe this survey is appropriate for
benchmarking executive compensation because: the companies surveyed are similar in size, both in
terms of revenues and market capitalization, to Endwave; Endwave competes with many of the surveyed
companies for executive and technical talent; and companies in the indices are selected
independently by Radford. We do not benchmark our executive compensation solely against companies
in our industry because few of our competitors are close to our size. Most of our competitors are
very large, diversified companies or very small, privately-held companies. Rather, we focus on the
companies with whom we compete most vigorously for executive and technical talent.
Elements of Executive Compensation
Our executive compensation consists of base salary, annual cash incentive, equity plan
participation and customary broad-based employee benefits. Consistent with our pay for performance
philosophy, the Compensation Committee believes that we can better motivate executive officers to
enhance stockholder return if a relatively large portion of their compensation is at risk that
is, contingent upon the achievement of performance objectives and overall strong company
performance. The mix of base salary, annual cash bonus opportunity based on achievement of
objectives and anticipated long-term stock-based compensation incentive (in the form of
appreciation in shares underlying stock options) varies depending on the officers position level,
but is always heavily weighted toward annual bonus and long-term stock-based compensation, as we
believe that best aligns our executive officers interests with that of our stockholders. The
Compensation Committee believes that the compensation of executives who set the overall strategy
for the business and have the greatest ability to execute that strategy should be largely
performance-based. Consequently, at least 50% of the target cash compensation of our Chief
Executive Officer, 42.9% of the target cash compensation of our Executive Vice Presidents and 33.3%
of the target cash compensation of our Senior Vice Presidents is based on overall company
performance. These percentages are derived from industry data provided by Radford.
Base Salary:
Base salaries for our executives are established based on the scope of their
responsibilities, taking into account market compensation paid by comparable companies for
equivalent positions. Base salaries are reviewed on an annual basis and any increases are similar
in scope to our overall corporate salary increase. For comparison purposes, we have utilized
compensation survey data from Radford. Our philosophy is to target executive base salaries near
the median range of salaries for executives in equivalent positions at comparable companies. We
believe targeting executive salaries at the median relative to comparable companies reflects our
best efforts to ensure we are neither overpaying nor underpaying our executives.
19.
Annual Cash Incentive:
Our executive cash incentive compensation plan typically provides for
a cash bonus award, payable once per year, that is dependent, in part, upon attaining stated
corporate objectives for the prior fiscal year. The goal of our executive cash incentive
compensation plan is to reward executives in a manner that is commensurate with the level of
achievement of certain financial and strategic goals that we believe, if attained, result in
greater long-term shareholder value. The Compensation Committee approves these financial and
strategic goals on an annual basis. These financial and strategic goals typically have a one-year
time horizon. During 2008, the relevant performance goals were based on revenues, gross margin
percentage, profit margin and asset utilization. The Compensation Committee and management use
these factors because they are easy to measure and compare to comparable companies and because they
are reflective of success and growth in our business and the creation of long-term stockholder
value.
For each performance factor, the Compensation Committee assigns four different percentage
payout levels (in 2008, 0%, 10%, 25% or 35%), depending on Endwaves financial performance.
Therefore, the performance factor multiplier can range from 0% if Endwave does not attain any of
its performance goals to 140% if Endwave achieves its highest targets on all four performance
goals. This performance multiplier is then multiplied by the executive officers target (100% of
base salary for our Chief Executive Officer, 75% of base salary for our Executive Vice Presidents
and 50% for Senior Vice Presidents), deriving the maximum bonus awards achievable of 140% of base
salary for our Chief Executive Officer, 105% of base salary for our Executive Vice Presidents and
70% of base salary for Senior Vice Presidents. An officers bonus may be increased or decreased in
the discretion of the Compensation Committee, to take into account any factors the Compensation
Committee deems relevant, such as superior or sub-par performance by a particular executive officer
or to take into account particular factors affecting Endwaves business for the year that distorted
the Companys financial performance.
As discussed above, each executive officers annual cash incentive payment is dependent on the
degree of achievement with regard to each performance goal and is subject to discretionary
adjustment by the Compensation Committee. These performance goals are established so that target
attainment is not assured and the attainment of payment for performance requires significant effort
on the part of our executives. Our Compensation Committee establishes relevant performance metrics
under the Executive Incentive Plan that it believes range from realistic to very difficult in terms
of managements ability to achieve the corresponding payout levels. Typically, the relevant
performance metrics for the current year are based on significant improvement in performance over
the prior years actual results.
Based on Endwaves financial performance and an analysis of each executive officers
contributions in 2008, the Compensation Committee determined payment of 2008 annual bonuses of 20%
of base salary for our Chief Executive Officer, 15% of base salary for our Executive Vice
Presidents and 10% of base salary for our Senior Vice Presidents. The value of the annual bonuses
paid to our named executive officers is reflected in the Summary Compensation Table below. For
2009, the Compensation Committee has recommended that no bonuses be paid to named executive
officers.
Stock Options:
We believe that stock ownership is an important factor in aligning corporate
and individual goals. Therefore, we utilize stock options to encourage long-term performance, with
excellent corporate performance (as manifested in our common stock price) and extended officer
tenure producing potentially significant value. Upon joining Endwave, executive officers receive
an initial stock option grant. This grant is based on relevant industry comparisons including data
from Radford and is intended to be commensurate with the experience level and scope of
responsibilities of the incoming executive officer. In addition, all executive officers receive
annual option grants. On an annual basis, the Compensation Committee reviews with the Board the
percentage ownership of Endwave held by employees and compares that to the employee ownership of
comparable companies. The Compensation Committee uses this metric because it is easy to measure
and compare to comparable companies. Based on its review, the Compensation Committee approves an
annual grant. For 2008, the aggregate annual grant to all employees was approximately 4% of
fully-diluted shares.
All option grants are approved by the Compensation Committee at Endwaves regular quarterly
Board of Directors meeting. The options are approved so that the grant date is three days after
the release of our financial results for the preceding quarter. The exercise price for option
awards is determined as the closing price on the day prior to grant. As permitted under U.S.
generally accepted accounting principles, Endwave has historically
20.
determined fair market value under its stock option plans based upon the closing market price
as reported by the NASDAQ Global Market for the day preceding the date of grant.
Other Benefits:
Executive officers are eligible to participate in all of our employee benefit
plans, such as medical, dental, group life, disability, and accidental death and dismemberment
insurance, our 401(k) plan and our Employee Stock Purchase Plan (ESPP). During 2008, we made
group life insurance payments as reflected in the Summary Compensation Table below. We do not
maintain any pension plan, retirement benefit or deferred compensation arrangements other than our
401(k) plan. Endwave currently has a program applicable to all of its 401(k) plan participants
under which it matches 50% of employee contributions up to a maximum of 4% of base salary.
Chief Executive Officer Compensation
In general, the factors utilized in determining Mr. Keibles compensation were similar to
those applied to the other executive officers in the manner described in the preceding paragraphs.
A significant percentage of his potential compensation was, and continues to be, subject to
consistent, positive, long-term company performance. Based on a review of the above mix of factors,
for 2008, the Compensation Committee granted to Mr. Keible compensation as detailed in the Summary
Compensation Table below. Based on these figures, over 70% of Mr. Keibles total compensation
(measured according to the Summary Compensation Table and reflecting the Estimated Possible Target
Payout as discussed in the Grants of Plan-Based Awards Table) was based on variable components such
as performance-based cash bonus and stock options.
Employment, Severance and Change in Control Agreements
We believe that the retention of our executive officers is critical to our business. Given
the competitive nature of the technology industry, the demand for experienced executives is high.
Moreover, the level of involuntary terminations of executives in the technology industry is high.
In order to encourage our key employees to remain with Endwave, our board of directors has
established and maintains our Executive Officer Severance and Retention Plan. Our Chief Executive
Officer, Executive Vice Presidents and Senior Vice Presidents participate in the Executive Officer
and Retention Plan.
Executive Officer Severance and Retention Plan Assuming No Change of Control:
Under the
Executive Officer Severance and Retention Plan, if a participating executive officer is terminated
without cause, or resigns for certain specified reasons constituting constructive termination, the
executive officer will receive (i) salary and benefits continuation based on the executive
officers position and length of service with us and (ii) acceleration of vesting on the unvested
portion of some of the executive officers stock options, based on the officers position and
length of service with us. In the case of the Chief Executive Officer, the salary and benefits
continuation period will be equal to the greater of two months for every year of service to us, or
a total of 12 months, if the termination of employment does not occur in connection with, or within
six months after, a change in control transaction. In the case of an Executive Vice President, the
salary and benefits continuation will be equal to the greater of 1.5 months for every year of
service to us, or a total of nine months, if the termination of employment does not occur in
connection with, or within six months after, a change in control transaction. The Executive
Officer Severance and Retention Plan does not provide for any benefits for Senior Vice Presidents
in the absence of a change of control.
Potential 2008 Severance and Retention Benefits Assuming No Change of Control
The following table shows the potential payout to our Chief Executive Officer and Executive
Vice Presidents assuming termination does not occur in connection with, or within six months after,
a change of control. The analysis assumes the employees were terminated without cause on December
31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COBRA
|
|
Option
|
|
Total
|
Name
|
|
Salary (1)
|
|
Benefits (2)
|
|
Awards (3)
|
|
Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward A. Keible, Jr.
|
|
$
|
900,667
|
|
|
$
|
31,769
|
|
|
$
|
0
|
|
|
$
|
932,436
|
|
John J. Mikulsky
|
|
$
|
423,000
|
|
|
$
|
29,269
|
|
|
$
|
0
|
|
|
$
|
452,269
|
|
Brett W. Wallace (4)
|
|
$
|
188,250
|
|
|
$
|
14,635
|
|
|
$
|
0
|
|
|
$
|
202,885
|
|
21.
|
|
|
(1)
|
|
Reflects 2 months salary for each full year of employment for Mr. Keible (28 months total),
1.5 months salary for each full year of employment for Mr. Mikulsky (18 months total) and 9
months salary for Mr. Wallace.
|
|
(2)
|
|
Reflects 2 months coverage for each full year of employment for Mr. Keible (28 months total),
1.5 months coverage for each full year of employment for Mr. Mikulsky (18 months total) and 9
months coverage for Mr. Wallace.
|
|
(3)
|
|
Reflects value of options accelerated in the event of termination without cause without a
change of control. Since the closing price of Endwaves common stock on December 31, 2008,
was less than the exercise price of the options that would have been accelerated under the
Severance and Retention Plan, the value of shares as to which vesting would have been
accelerated is assumed to be zero.
|
|
(4)
|
|
Mr. Wallace is expected to cease serving as Endwaves Chief Financial Officer on June 26,
2009 and Mr. Curt P. Sacks, Endwaves current Vice President, Finance and Corporate
Controller, will be promoted to Senior Vice President and Chief Financial Officer. Mr. Sacks
will be eligible to participate in Endwaves Executive Severance and Retention Plan upon his
promotion to Senior Vice President and Chief Financial Officer. In connection with Mr.
Wallaces departure, he will receive the severance benefits set forth above.
|
Executive Officer Severance and Retention Plan Assuming a Change of Control:
Under the
Executive Officer Severance and Retention Plan, if an executive officer is terminated without
cause, or resigns for certain specified reasons constituting constructive termination, the
executive officer will receive (i) salary and benefits continuation based on the executive
officers position and length of service with us and (ii) acceleration of vesting on the unvested
portion of some of the executive officers stock options, based on the officers position and
length of service with us. The Compensation Committee believes that it is in the best interests of
stockholders if our executive officers are able to focus on our business during both strong and
weak business cycles without being distracted by the near-term financial impact that a potential
termination of employment might have on them personally. Under the circumstances set forth above,
subject to certain exceptions, an executive officer will vest as if the executive officer had
remained employed by Endwave for twice the salary continuation period described above. Upon the
closing of a change in control transaction, each executive officer will receive this same amount of
acceleration of vesting even if his or her employment is not terminated. However, if an executive
officers employment is terminated by us without cause or by the executive officer for certain
specified reasons in connection with, or within six months after, the change in control
transaction, the executive officer will receive salary continuation for twice the period that would
have applied had such termination not occurred in connection with a change in control, and
additional accelerated vesting in the same amount as provided when termination does not occur in
connection with a change in control transaction. The Compensation Committee believes it is in the
best interests of stockholders if our executive officers are able to evaluate the potential merits
of a change-of-control transaction objectively without being distracted by the potentially adverse
personal impact on themselves. The Compensation Committee believes that the total potential value
of all change of control agreements with our executive officers is not disproportionate to the
overall market value of Endwave.
22.
Potential 2008 Severance and Retention Benefits Assuming a Change of Control
The following table shows the potential payout to named executive officers under our Executive
Officer Severance and Retention Plan assuming termination occurs in connection with, or within six
months after, a change of control. The analysis assumes the employees were terminated without
cause on December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COBRA
|
|
Option
|
|
Total
|
Name
|
|
Salary (1)
|
|
Benefits (2)
|
|
Awards (3)
|
|
Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward A. Keible, Jr.
|
|
$
|
1,801,333
|
|
|
$
|
31,769
|
|
|
$
|
0
|
|
|
$
|
1,833,102
|
|
John J. Mikulsky
|
|
$
|
846,000
|
|
|
$
|
29,269
|
|
|
$
|
0
|
|
|
$
|
875,269
|
|
Brett W. Wallace (4)
|
|
$
|
376,500
|
|
|
$
|
14,635
|
|
|
$
|
0
|
|
|
$
|
391,135
|
|
David M. Hall (5)
|
|
$
|
90,769
|
|
|
$
|
4,813
|
|
|
$
|
0
|
|
|
$
|
95,582
|
|
Steven F. Layton
|
|
$
|
132,308
|
|
|
$
|
13,008
|
|
|
$
|
0
|
|
|
$
|
145,316
|
|
Daniel P. Teuthorn
|
|
$
|
140,923
|
|
|
$
|
11,086
|
|
|
$
|
0
|
|
|
$
|
152,009
|
|
|
|
|
(1)
|
|
Reflects 4 months salary for each full year of employment for Mr. Keible (56 months total),
3.0 months salary for each full year of employment for Mr. Mikulsky (36 months total), 18
months salary for Mr. Wallace, 20 weeks salary for Mr. Hall, and 32 weeks salary for Messrs.
Layton and Teuthorn.
|
|
(2)
|
|
Reflects 2 months coverage for each full year of employment for Mr. Keible (28 months total),
1.5 months coverage for each full year of employment for Mr. Mikulsky (18 months total), 9
months coverage for Mr. Wallace, 20 weeks for Mr. Hall, and 32 weeks for Messrs. Layton and
Teuthorn.
|
|
(3)
|
|
Reflects value of options accelerated in the event of termination without cause in connection
with a change of control. Since the closing price of Endwaves common stock on December 31,
2008, was less than the exercise price of the options that would have been accelerated under
the Severance and Retention Plan, the value of shares as to which vesting would have been
accelerated is assumed to be zero.
|
|
(4)
|
|
Mr. Wallace is expected to cease serving as Endwaves Chief Financial Officer on June 26,
2009.
|
|
(5)
|
|
On May 15, 2009, in connection with the acquisition by Microsemi, Inc. of our defense and
security business, Mr. Hall ceased serving as our Senior Vice President and General Manager,
Defense and Security and joined Microsemi, Inc.
|
Named Executive Officer Compensation
The following table provides information regarding all plan and non-plan compensation awarded
to, earned by or paid to our chief executive officer, our chief financial officer, each of our
other executive officers serving as such at the end of 2008 for all services rendered in all
capacities to us during 2006, 2007 and 2008. We refer to these executive officers as our named
executive officers.
23.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Compensation
|
|
|
(1)
|
|
(2)
|
|
(3)
|
|
(4)
|
|
(5)
|
|
(6)
|
|
(7)
|
Edward A. Keible, Jr.
|
|
|
2008
|
|
|
$
|
384,615
|
|
|
|
|
|
|
$
|
533,938
|
|
|
$
|
77,200
|
|
|
$
|
9,492
|
|
|
$
|
1,005,245
|
|
President and Chief Executive Officer
|
|
|
2007
|
|
|
$
|
371,923
|
|
|
$
|
1,741
|
|
|
$
|
570,948
|
|
|
$
|
0
|
|
|
$
|
11,827
|
|
|
$
|
956,439
|
|
|
|
|
2006
|
|
|
$
|
325,631
|
|
|
|
|
|
|
$
|
431,546
|
|
|
$
|
178,000
|
|
|
$
|
10,089
|
|
|
$
|
945,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Mikulsky
|
|
|
2008
|
|
|
$
|
280,385
|
|
|
|
|
|
|
$
|
232,252
|
|
|
$
|
42,300
|
|
|
$
|
7,287
|
|
|
$
|
562,224
|
|
Chief Operating Officer
|
|
|
2007
|
|
|
$
|
266,154
|
|
|
|
|
|
|
$
|
234,746
|
|
|
$
|
0
|
|
|
$
|
5,773
|
|
|
$
|
506,673
|
|
and Executive Vice President
|
|
|
2006
|
|
|
$
|
250,846
|
|
|
|
|
|
|
$
|
190,347
|
|
|
$
|
94,500
|
|
|
$
|
7,267
|
|
|
$
|
542,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brett W. Wallace (8)
|
|
|
2008
|
|
|
$
|
249,269
|
|
|
|
|
|
|
$
|
261,438
|
|
|
$
|
37,600
|
|
|
$
|
6,324
|
|
|
$
|
554,631
|
|
Chief Financial Officer
|
|
|
2007
|
|
|
$
|
233,000
|
|
|
|
|
|
|
$
|
351,127
|
|
|
$
|
0
|
|
|
$
|
2,785
|
|
|
$
|
586,912
|
|
and Executive Vice President
|
|
|
2006
|
|
|
$
|
170,038
|
|
|
|
|
|
|
$
|
349,168
|
|
|
$
|
65,625
|
|
|
$
|
315
|
|
|
$
|
585,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David M. Hall (9)
|
|
|
2008
|
|
|
$
|
235,192
|
|
|
|
|
|
|
$
|
185,441
|
|
|
$
|
23,600
|
|
|
$
|
6,384
|
|
|
$
|
450,617
|
|
Senior Vice President
|
|
|
2007
|
|
|
$
|
227,961
|
|
|
|
|
|
|
$
|
272,262
|
|
|
$
|
0
|
|
|
$
|
4,971
|
|
|
$
|
505,194
|
|
General Manager, Defense and Security
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven F. Layton
|
|
|
2008
|
|
|
$
|
213,731
|
|
|
|
|
|
|
$
|
116,318
|
|
|
$
|
21,500
|
|
|
$
|
5,492
|
|
|
$
|
357,041
|
|
Senior Vice President
|
|
|
2007
|
|
|
$
|
201,808
|
|
|
|
|
|
|
$
|
119,767
|
|
|
$
|
0
|
|
|
$
|
55,903
|
|
|
$
|
377,478
|
|
General Manager, Telecom
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel F. Teuthorn
|
|
|
2008
|
|
|
$
|
227,731
|
|
|
|
|
|
|
$
|
106,878
|
|
|
$
|
22,900
|
|
|
$
|
86,921
|
|
|
$
|
444,430
|
|
Senior Vice President
|
|
|
2007
|
|
|
$
|
216,039
|
|
|
|
|
|
|
$
|
119,715
|
|
|
$
|
0
|
|
|
$
|
57,172
|
|
|
$
|
392,926
|
|
General Manager, Technology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Messrs. Hall, Layton and Teuthorn were promoted to executive officer positions in February
2007; therefore, data for 2006 is not reported.
|
|
(2)
|
|
The amounts in this column include any salary contributed by the named executive officer to
our 401(k) plan.
|
|
(3)
|
|
Reflects cash bonus paid to Mr. Keible for the award of a patent. Any bonus amounts paid
under our non-equity incentive plan are included in the Non-Equity Incentive Plan
Compensation column.
|
|
(4)
|
|
The amounts included in the Option Awards column represent the compensation cost recognized
by Endwave related to stock option awards to named executive officers, computed in accordance
with SFAS No. 123(R). For purposes of this table, the value excludes the impact of estimated
forfeitures. For a discussion of other valuation assumptions, see Note 7 to our consolidated
financial statements included elsewhere in this report.
|
|
(5)
|
|
The amounts in this column represent total performance-based bonuses earned for services
rendered during the fiscal year.
|
|
(6)
|
|
All Other Compensation represents group insurance payments, 401(k) employer matching
contributions and educational reimbursement payments made by Endwave. Other Compensation for
Mr. Teuthorn included educational reimbursement of $81,123 in 2008 and $52,459 in 2007.
|
|
(7)
|
|
The dollar value in this column for each named executive officer represents the sum of all
compensation reflected in the preceding columns.
|
|
(8)
|
|
Mr. Wallace is expected to cease serving as Endwaves Chief Financial Officer on June 26,
2009. Mr. Wallace joined Endwave on March 1, 2006, as Executive Vice President. He was
promoted to Chief Financial Officer on April 25, 2006. Mr. Wallaces annual salary for 2006
was $210,000.
|
|
(9)
|
|
Mr. Hall ceased serving as our Senior Vice President and General Manager, Defense and
Security on May 15, 2009.
|
24.
The following table provides information with regard to potential cash bonuses paid or payable
in 2008 under our performance-based, non-equity incentive plan, and with regard to stock options
granted to each named executive officer during 2008. During 2008, Endwave offered to exchange
certain fully-vested out-of-the-money options for new options with a four-year vesting period and
an exercise price based on the prevailing per share price of our common stock. All Endwave
employees including executive officers and non-executive directors were offered the opportunity to
exchange options with exercise prices at or above $21.47 per share for these newly-issued options.
The Compensation Committee took this action with the intent of aligning our employees interests
with our stockholders interests and fostering employee retention. Believing that these
out-of-the-money options no longer provided the long-term incentive and retention objectives that
they were intended to provide, the exchange offer addressed this situation by providing employees
with an opportunity to exchange eligible option grants for new option grants. This exchange offer
was completed on February 6, 2008. The table below reflects options that were granted as part of
this exchange offer as well as annual options grants for 2008. Other than the options awards noted
below, there were no other stock awards granted during 2008.
Grants of Plan-Based Awards in Fiscal 2008 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Option
|
|
Exercise
|
|
Closing Market
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
Awards: Number
|
|
or Base
|
|
Price of
|
|
Grant Date
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
of Securities
|
|
Price of
|
|
Securities
|
|
Fair Value of
|
|
|
|
|
|
|
Plan Awards
|
|
Underlying
|
|
Option
|
|
Underlying
|
|
Stock and
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Options
|
|
Awards
|
|
Option
|
|
Option Awards
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
($/Sh)
|
|
($/Sh) (1)
|
|
($) (2)
|
Edward A. Keible, Jr.
|
|
|
2/8/08
|
|
|
$
|
0
|
|
|
$
|
386,000
|
|
|
$
|
540,400
|
|
|
|
170,313
|
|
|
$
|
6.59
|
|
|
$
|
6.62
|
|
|
$
|
468,699
|
|
John J. Mikulsky
|
|
|
2/8/08
|
|
|
$
|
0
|
|
|
$
|
211,500
|
|
|
$
|
296,100
|
|
|
|
85,000
|
|
|
$
|
6.59
|
|
|
$
|
6.62
|
|
|
$
|
222,316
|
|
Brett W. Wallace
|
|
|
2/8/08
|
|
|
$
|
0
|
|
|
$
|
188,250
|
|
|
$
|
263,550
|
|
|
|
40,000
|
|
|
$
|
6.59
|
|
|
$
|
6.62
|
|
|
$
|
134,128
|
|
David M. Hall
|
|
|
2/8/08
|
|
|
$
|
0
|
|
|
$
|
118,000
|
|
|
$
|
165,200
|
|
|
|
20,000
|
|
|
$
|
6.59
|
|
|
$
|
6.62
|
|
|
$
|
67,064
|
|
Steven F. Layton
|
|
|
2/8/08
|
|
|
$
|
0
|
|
|
$
|
107,500
|
|
|
$
|
150,500
|
|
|
|
42,500
|
|
|
$
|
6.59
|
|
|
$
|
6.62
|
|
|
$
|
111,158
|
|
Daniel P. Teuthorn
|
|
|
2/8/08
|
|
|
$
|
0
|
|
|
$
|
114,500
|
|
|
$
|
160,300
|
|
|
|
34,063
|
|
|
$
|
6.59
|
|
|
$
|
6.62
|
|
|
$
|
93,540
|
|
|
|
|
(1)
|
|
The exercise price for option awards is determined as the closing price on the day prior to
grant. Therefore, the grant date closing price of the security underlying the option can
differ materially, positively or negatively, from the exercise price of the option award.
|
|
(2)
|
|
Each option vests as to 1/8 of the shares of common stock underlying it on the six month
anniversary of the grant date, with the remaining seven-eighths of the grant vesting in equal
quarterly installments over the remaining four-year vesting period. For the purposes of this
table, the value excludes the impact of estimated forfeitures. For a discussion of other
valuation assumptions, see Note 8 to our consolidated financial statements.
|
The following table provides information regarding each unexercised stock option held by each
of our named executive officers as of December 31, 2008. Other than stock options as noted, there
were no other stock awards outstanding at December 31, 2008.
25.
Outstanding Equity Awards at December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
Unexercised Options(1)(2)
|
|
Exercise
|
|
Expiration
|
Name and Principal Position
|
|
Exercisable
|
|
Unexercisable
|
|
Price
|
|
Date
|
Edward A. Keible, Jr.
|
|
|
75,000
|
|
|
|
0
|
|
|
$
|
9.77
|
|
|
|
2/6/2016
|
|
|
|
|
37,500
|
|
|
|
0
|
|
|
$
|
10.20
|
|
|
|
8/2/2014
|
|
|
|
|
42,500
|
|
|
|
0
|
|
|
$
|
10.22
|
|
|
|
2/2/2014
|
|
|
|
|
32,813
|
(3)
|
|
|
0
|
|
|
$
|
6.59
|
|
|
|
2/7/2018
|
|
|
|
|
37,500
|
(3)
|
|
|
0
|
|
|
$
|
6.59
|
|
|
|
2/7/2018
|
|
|
|
|
100,000
|
|
|
|
0
|
|
|
$
|
13.23
|
|
|
|
2/11/2017
|
|
|
|
|
1,000
|
|
|
|
0
|
|
|
$
|
13.23
|
|
|
|
2/11/2017
|
|
|
|
|
100,000
|
|
|
|
0
|
|
|
$
|
6.59
|
|
|
|
2/7/2018
|
|
John J. Mikulsky
|
|
|
5,860
|
|
|
|
0
|
|
|
$
|
1.17
|
|
|
|
1/30/2013
|
|
|
|
|
13,894
|
|
|
|
0
|
|
|
$
|
1.93
|
|
|
|
6/5/2013
|
|
|
|
|
30,000
|
|
|
|
0
|
|
|
$
|
9.77
|
|
|
|
2/6/2016
|
|
|
|
|
15,000
|
|
|
|
0
|
|
|
$
|
10.20
|
|
|
|
8/2/2014
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
$
|
10.22
|
|
|
|
2/2/2014
|
|
|
|
|
4,923
|
|
|
|
0
|
|
|
$
|
11.75
|
|
|
|
1/5/2011
|
|
|
|
|
15,000
|
(3)
|
|
|
0
|
|
|
$
|
6.59
|
|
|
|
2/7/2018
|
|
|
|
|
30,000
|
(3)
|
|
|
0
|
|
|
$
|
6.59
|
|
|
|
2/7/2018
|
|
|
|
|
40,000
|
|
|
|
0
|
|
|
$
|
13.23
|
|
|
|
2/11/2017
|
|
|
|
|
40,000
|
|
|
|
0
|
|
|
$
|
6.59
|
|
|
|
2/7/2018
|
|
Brett W. Wallace
|
|
|
120,000
|
|
|
|
0
|
|
|
$
|
9.32
|
|
|
|
2/29/2016
|
|
|
|
|
40,000
|
|
|
|
0
|
|
|
$
|
13.23
|
|
|
|
2/11/2017
|
|
|
|
|
40,000
|
|
|
|
0
|
|
|
$
|
6.59
|
|
|
|
2/7/2018
|
|
David M. Hall
|
|
|
80,000
|
|
|
|
0
|
|
|
$
|
12.90
|
|
|
|
10/19/2015
|
|
|
|
|
15,000
|
|
|
|
0
|
|
|
$
|
9.77
|
|
|
|
2/6/2016
|
|
|
|
|
20,000
|
|
|
|
0
|
|
|
$
|
13.23
|
|
|
|
2/11/2017
|
|
|
|
|
20,000
|
|
|
|
0
|
|
|
$
|
6.59
|
|
|
|
2/7/2018
|
|
Steven F. Layton
|
|
|
1,351
|
|
|
|
0
|
|
|
$
|
1.17
|
|
|
|
1/30/2013
|
|
|
|
|
11,723
|
|
|
|
0
|
|
|
$
|
1.93
|
|
|
|
6/5/2013
|
|
|
|
|
15,000
|
|
|
|
0
|
|
|
$
|
9.77
|
|
|
|
2/6/2016
|
|
|
|
|
15,000
|
(3)
|
|
|
0
|
|
|
$
|
6.59
|
|
|
|
2/7/2018
|
|
|
|
|
8,750
|
|
|
|
0
|
|
|
$
|
10.20
|
|
|
|
8/2/2014
|
|
|
|
|
18,000
|
|
|
|
0
|
|
|
$
|
10.22
|
|
|
|
2/2/2014
|
|
|
|
|
7,500
|
(3)
|
|
|
0
|
|
|
$
|
6.59
|
|
|
|
2/7/2018
|
|
|
|
|
20,000
|
|
|
|
0
|
|
|
$
|
13.23
|
|
|
|
2/11/2017
|
|
|
|
|
20,000
|
|
|
|
0
|
|
|
$
|
6.59
|
|
|
|
2/7/2018
|
|
Daniel P. Teuthorn
|
|
|
938
|
|
|
|
0
|
|
|
$
|
1.17
|
|
|
|
1/30/2013
|
|
|
|
|
15,000
|
|
|
|
0
|
|
|
$
|
9.77
|
|
|
|
2/6/2016
|
|
|
|
|
7,500
|
|
|
|
0
|
|
|
$
|
10.20
|
|
|
|
8/2/2014
|
|
|
|
|
15,000
|
|
|
|
0
|
|
|
$
|
10.22
|
|
|
|
2/2/2014
|
|
|
|
|
6,563
|
(3)
|
|
|
0
|
|
|
$
|
6.59
|
|
|
|
2/7/2018
|
|
|
|
|
7,500
|
(3)
|
|
|
0
|
|
|
$
|
6.59
|
|
|
|
2/7/2018
|
|
|
|
|
20,000
|
|
|
|
0
|
|
|
$
|
13.23
|
|
|
|
2/11/2017
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|
|
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20,000
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|
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0
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$
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6.59
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|
|
2/7/2018
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(1)
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Each option vests as to 1/8 of the shares of common stock underlying
it on the six month anniversary of the grant date, with the remaining
seven-eighths of the grant vesting in equal quarterly installments
over the remaining four-year vesting period. Each option expires ten
years after the date of grant or, if earlier, three months after
termination of employment in most cases.
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(2)
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All options described in the above table are reflected as exercisable
because all options granted to our executive officers have an early
exercise feature that allows optionees to exercise unvested options,
subject to our right to repurchase the unvested shares at cost upon
the optionees termination of employment. Options unvested as of
December 31, 2008 are as follows: Keible, 218,633; Mikulsky, 100,939;
Wallace, 92,500; Hall, 52,189; Layton, 50,471; and Teuthorn, 43,617.
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26.
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(3)
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This option was replaced in our 2008 option exchange program for an
option exercisable for the same number of shares but with an exercise
price per share of $6.59. As required by such program, the new option
vests over four years beginning in February 2008.
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2008 Option Exercises
There were no stock options exercised by our named executive officers during 2008.
Compensation of Non-Employee Directors
The following table provides information regarding compensation paid to our non-employee
directors who served on our board as of December 31, 2008.
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Fees Paid
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Option
|
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Total
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Name
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In Cash
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Awards
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Compensation
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|
|
|
|
|
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(1)
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|
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|
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Edward C.V. Winn, Chairman
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$
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44,000
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|
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$
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48,065
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$
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92,065
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Joseph J. Lazzara
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$
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34,000
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$
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34,664
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|
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$
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68,664
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John F. McGrath
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$
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41,000
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|
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$
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51,573
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$
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92,573
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Wade Meyercord
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$
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33,000
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$
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35,704
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$
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68,704
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Eric D. Stonestrom
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$
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28,000
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$
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60,313
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$
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88,313
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(1)
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The amounts included in the Option Awards column represent the compensation cost recognized
by Endwave in 2008 related to stock option awards to each member of our Board of Directors,
computed in accordance with SFAS No. 123(R). For purposes of this table, the value excludes
the impact of estimated forfeitures. For a discussion of other valuation assumptions, see
Note 7 to our consolidated financial statements.
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At its January 2009 meeting, the Compensation Committee completed its annual review of cash
and equity compensation of the board. The Compensation Committee reviewed the cash and equity
board compensation paid by a set of technology companies with revenues and market capitalization
similar to those of Endwave. The Compensation Committee recommended to the full Board of Directors
that cash compensation remain unchanged from 2008 and the Board of Directors approved. The levels
of cash compensation shown below were reviewed and approved based on projected current median pay
levels of the peer group. The members of the Board of Directors are also eligible for
reimbursement for travel expenses incurred in connection with attendance at Board of Directors and
committee meetings in accordance with Endwave company policy.
Board Membership Fees Payable to Non-Employee Directors
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|
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Non-Employee Director Annual Retainer
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$
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25,000
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Board Chair Annual Retainer
|
|
$
|
10,000
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Audit Committee Chair Annual Retainer
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|
$
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16,000
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Audit Committee Member Annual Retainer
|
|
$
|
6,000
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Compensation Committee Chair Annual Retainer
|
|
$
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8,000
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Compensation Committee Member Annual Retainer
|
|
$
|
3,000
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Nominating and Governance Committee Chair Annual Retainer
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|
$
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3,000
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Nominating and Governance Committee Member Annual Retainer
|
|
$
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0
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Board Meeting Fee
|
|
$
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0
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Committee Meeting Fee
|
|
$
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0
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Non-employee directors are eligible to receive automatic option grants made under our
Companys 2000 Non-Employee Director Plan and our Companys 2007 Equity Incentive Plan. Pursuant
to these plans, each non-employee director is granted an option, referred to as an initial option,
to purchase 20,000 shares of common stock automatically upon his or her initial election or
appointment to the Board of Directors. Each non-employee director is also granted an option,
referred to as an annual option, to purchase an additional 10,000 shares of common stock each year after his or her election or appointment to the Board of Directors. Such annual
option is typically granted on May 1. In either case, if any non-employee director has not served
in that capacity for the entire period since the preceding grant date, then the number of shares
subject to the annual grant will be reduced, pro rata, for each full
27.
quarter the director did not
serve during the previous period. All such options expire after ten years and have an exercise
price equal to the fair market value on the date of grant. All initial options vest over four
years at the rate of 1/48 of the total option shares per month. Annual options granted after
February 2008 vest over one year at the rate of 1/12 of the total option shares per month. Our
Companys non-employee directors are also eligible to participate in our Companys 2007 Equity
Incentive Plan on a discretionary basis. No discretionary awards were made to non-employee
directors during 2008.
Compensation Committee Interlocks and Insider Participation
As noted above, our Compensation Committee consists of Messrs. Meyercord, Lazzara, Stonestrom
and Winn. During fiscal year 2008, we had no business with any of the entities represented by, or
affiliated with, these directors.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
1
The Compensation Committee has reviewed and discussed with management the Compensation
Discussion and Analysis, or CD&A, contained in this report. Based on this review and discussion,
the Compensation Committee has recommended to our board of directors that the CD&A be included in
this report.
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Compensation Committee
Mr. Wade Meyercord (Chairperson)
Mr. Joseph Lazzara
Mr. Eric Stonestrom
Mr. Edward C.V. Winn
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1
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The material in this report is not soliciting
material, is not deemed filed with the Securities and Exchange Commission
and is not to be incorporated by reference in any of our filings under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
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28.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Indemnification
Our bylaws provide that we will indemnify our directors and executive officers and may
indemnify our other officers, employees and other agents to the extent not prohibited by Delaware
law. The bylaws also require us to advance litigation expenses in the case of stockholder
derivative actions or other actions. The indemnified party must repay such advances if it is
ultimately determined that the indemnified party is not entitled to indemnification.
Related-Person Transactions Policy and Procedures
We have a corporate policy with regard to our policies and procedures for the identification,
review, consideration and approval or ratification of related-person transactions. For purposes
of our policy only, a related-person transaction is a transaction, arrangement or relationship
(or any series of similar transactions, arrangements or relationships) in which Endwave and any
related person are participants involving an amount that exceeds $5,000. Transactions involving
compensation for services provided to Endwave as an employee, director, consultant or similar
capacity by a related person are not covered by this policy. A related person is any executive
officer, director, or more than 5% stockholder of the Company, including any of their immediate
family members, and any entity owned or controlled by such persons. This policy is not currently in
writing but instead is dictated by principles of Delaware corporate law as in effect at the time
and the discharge of our directors fiduciary duties to Endwave.
In the event any transaction in which we propose to engage is a related-person transaction,
our management must present information regarding the proposed related-person transaction to the
disinterested non-employee members of our board of directors for consideration and approval or
ratification. The presentation must include a description of, among other things, the material
facts, the interests, direct and indirect, of the related persons, the benefits to Endwave of the
transaction and whether any alternative transactions were available. To identify related-person
transactions in advance, we rely on information supplied by our executive officers, directors and
significant stockholders. In considering related-person transactions, the disinterested
non-employee members of the board take into account the relevant available facts and circumstances
including, but not limited to (a) the risks, costs and benefits to Endwave, (b) the impact on a
directors independence in the event the related person is a director, immediate family member of a
director or an entity with which a director is affiliated, (c) the terms of the transaction, (d)
the availability of other sources for comparable services or products and (e) the terms available
to or from, as the case may be, unrelated third parties or to or from employees generally. In the
event a director has an interest in the proposed transaction, the director must recuse himself or
herself form the deliberations and approval. The policy requires that, in determining whether to
approve, ratify or reject a related-person transaction, the disinterested non-employee members of
the board look at, in light of known circumstances, whether the transaction is in, or is not
inconsistent with, the best interests of Endwave and its stockholders, as determined in the good
faith exercise of such directors discretion.
29.
Householding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy
the delivery requirements for proxy materials or notices of internet availability of proxy
materials with respect to two or more stockholders sharing the same address by delivering a single
set of materials or notice addressed to those stockholders. This process, which is commonly
referred to as householding, potentially means extra convenience for stockholders and cost
savings for companies.
This year, a number of brokers with account holders who are our stockholders will be
householding our proxy materials. A single set of materials or notice will be delivered to
multiple stockholders sharing an address unless contrary instructions have been received from the
affected stockholders. Once you have received notice from your broker that they will be
householding communications to your address, householding will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in
householding and would prefer to receive a separate set of materials or notice, please notify
your broker. If you are subject to householding and wish to receive a separate set of materials
or notice, direct your written request to Endwave Corporation, Attn: Curt Sacks, Corporate
Secretary, 130 Baytech Drive, San Jose, California 95134 or contact Mr. Sacks at 408-522-3100.
Stockholders who currently receive multiple copies of the set of materials or notice at their
addresses and would like to request householding of their communications should contact their
brokers.
Other Matters
The Board of Directors knows of no other matters that will be presented for consideration at
the annual meeting. If any other matters are properly brought before the meeting, it is the
intention of the persons named in the accompanying proxy to vote on such matters in accordance with
their best judgment.
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By Order of the Board of Directors
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|
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Curt P. Sacks
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Corporate Secretary
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|
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June 8, 2009
Our Annual Report to the SEC on
Form 10-K
for the fiscal year ended December 31, 2008 is
included is these proxy materials. Additional copies of our Annual Report to the SEC on Form 10-K
for the fiscal year ended December 31, 2008 are available without charge upon written request to
Investor Relations, Endwave Corporation, 130 Baytech Drive, San Jose, California 95134.
30.
PROXY
ENDWAVE CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
For The Annual Meeting of Stockholders
To be held July 22, 2009
The undersigned hereby appoints Edward A. Keible, Jr. and Curt P. Sacks, and each of them, as
attorneys and proxies of the undersigned, with full power of substitution, to vote all of the
shares of stock of Endwave Corporation, which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of Endwave Corporation to be held at the corporate headquarters of Endwave
Corporation at 130 Baytech Drive, San Jose, California, on Wednesday July 22, 2009 at 8:00 am PDT,
and at any and all postponements, continuations and adjournments thereof with all powers that the
undersigned would possess if personally present, upon and in respect of the following matters and
in accordance with the following instructions, with discretionary authority as to any and all other
matters that may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN
PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC
INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE WHICH IS POSTAGE PREPAID
IF MAILED IN THE UNITED STATES.
(continued on reverse side)
A. Proposals The Board of Directors recommends a vote
FOR
all the nominees listed and
FOR
Proposal 2.
1. To elect the two directors listed below to hold office until the 2012 Annual Meeting of
Stockholders.
Edward A. Keible, Jr. Edward C.V. Winn
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o
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Mark here to vote
FOR
all
nominees
|
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o
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Mark here to
WITHHOLD
vote from all nominees
|
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o
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For all
EXCEPT
to
withhold authority to vote
for any nominee(s), write the
name(s) of such nominee(s)
below.
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For
|
|
Against
|
|
Abstain
|
|
2.
|
|
To ratify the selection by the Audit
Committee of the Board of Directors of
Burr, Pilger & Mayer LLP as independent
registered public accounting firm of
Endwave Corporation for its fiscal year
ending December 31, 2009.
|
|
o
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o
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o
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B. Non-Voting Items
Change of Address
please print new address below.
C. Authorized Signatures This section must be completed for your instructions to be executed.
Date and Sign Below
Please sign exactly as name(s) appears hereon. Join owners should each sign. When signing as an
attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give
full title.
Dated:
,
Endwave (NASDAQ:ENWV)
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