UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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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 Rule 14a-12
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INTELIQUENT, INC.
(Name
of Registrant as Specified In Its Charter)
(Name of Person(s)
Filing Proxy Statement, if other than the Registrant)
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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
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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 number or the
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Date Filed:
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550 West Adams Street, Suite 900
Chicago, Illinois 60661
April 8, 2016
To our Stockholders:
We are pleased to invite you to attend the annual meeting of stockholders of Inteliquent, Inc. (Inteliquent or
the Company) to be held on May 19, 2016 at 8:00 a.m. central time in Room 305 at IIT Chicago-Kent College of Law, which is located at 565 West Adams Street, Chicago, Illinois 60661.
Details regarding admission to the meeting and the business to be conducted are more fully described in the accompanying
notice of annual meeting of stockholders and proxy statement. Either (1) a notice of internet availability of proxy materials with instructions on how to access electronic copies of our annual meeting materials and vote or (2) the notice
of annual meeting of stockholders, proxy statement and proxy card are being mailed to stockholders on or about April 8, 2016.
Your vote is important. Whether or not you plan to attend the annual meeting, we hope you will vote as soon as possible by following the instructions on the enclosed proxy card or voting instruction card.
Voting by proxy will ensure your representation at the annual meeting regardless of whether you attend in person.
Thank you for your ongoing support of and continued interest in Inteliquent.
Sincerely,
Matthew Carter, Jr.
President and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of stockholders of Inteliquent, Inc. (Inteliquent or the Company) will be held
on May 19, 2016 at 8:00 a.m. central time in Room 305 at IIT Chicago-Kent College of Law, which is located at 565 West Adams Street, Chicago, Illinois 60661:
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To elect eight directors to our Board of Directors;
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To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending
December 31, 2016;
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To consider an advisory and non-binding say-on-pay vote regarding executive compensation, as described in the Compensation Discussion
and Analysis, executive compensation tables and accompanying narrative disclosure in this proxy statement;
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To approve an amendment to the Companys Amended and Restated Certificate of Incorporation to implement a majority voting standard in
uncontested elections of directors;
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To approve an amendment to the Companys Amended and Restated Certificate of Incorporation to provide that the Companys stockholders may
remove any director from office with or without cause; and
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To transact any other business as may properly come before the meeting or any adjournment or postponement thereof.
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Our Board of Directors recommends you vote FOR each of its nominees to the Board of Directors,
FOR the ratification of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2016, FOR the approval, on an advisory basis, of the compensation of our named
executive officers as described in the Compensation Discussion and Analysis, executive compensation tables and accompanying narrative disclosure in this proxy statement, FOR the amendment to the Companys Amended and Restated
Certificate of Incorporation to implement a majority voting standard in uncontested elections of directors and FOR the amendment to the Companys Amended and Restated Certificate of Incorporation to provide that the Companys
stockholders may remove any director from office with or without cause.
Stockholders of record at the close
of business on March 23, 2016 are entitled to notice of and to vote at the annual meeting and any adjournment or postponement thereof.
Whether or not you expect to be present at the meeting, please vote your shares by following the instructions on the notice of internet availability of proxy materials or, if you received a printed copy
of the proxy materials, on the enclosed proxy card or voting instruction card.
IF YOU PLAN TO ATTEND:
Please note that space limitations make it necessary to limit attendance to stockholders. Registration
will begin at 7:30 a.m. central time on May 19, 2016. You may be asked to present valid picture identification, such as a drivers license or passport. Stockholders holding stock in brokerage accounts (street name holders) will
need to bring a copy of the voting instruction card or a brokerage statement reflecting stock ownership as of the record date. Cameras, recording devices and other electronic devices will not be permitted at the meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
This proxy statement and our related 2015 Annual Report on Form 10-K are available for viewing, printing and downloading
at
www.proxyvote.com
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By Order of the Board of Directors,
Richard L.
Monto, General Counsel,
Senior Vice President and Corporate Secretary
Chicago, Illinois
April 8, 2016
2016 ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
QUESTIONS AND ANSWERS
Proxy Materials
Why did I receive a notice of Internet availability of proxy materials in the mail instead of a printed set of proxy materials?
Pursuant to rules adopted by the SEC, we may provide you with proxy materials over the Internet rather than by mailing the
materials to you. The notice of Internet availability contains instructions on how to access this proxy statement and our annual report and vote online. If you received a notice of Internet availability of proxy materials by mail, you will not
receive a printed copy of the proxy materials in the mail. Instead, the notice instructs you on how to access and review all of the information contained in the proxy statement and annual report. The notice also instructs you on how you may submit
your vote over the Internet or by telephone. If you received a notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the notice.
Why am I receiving this proxy statement?
The Board of Directors (the Board or the Board of Directors) of Inteliquent, Inc. (Inteliquent or the Company) has made this proxy statement available to
you and is soliciting your proxy to vote in connection with our 2016 annual meeting of stockholders. You are receiving a proxy statement because you owned shares of our common stock on March 23, 2016, the record date, and that entitles you to
vote at the meeting. By use of a proxy, you can vote whether or not you attend the meeting. This proxy statement describes the matters on which we would like you to vote and provides information on those matters so that you can make an informed
decision.
What information is contained in this proxy statement?
The information in this proxy statement relates to the proposals to be voted on at the annual meeting, the voting process,
our Board and Board committees, the compensation of directors and executive officers for 2016 and other required information.
Will I
receive a copy of Inteliquents annual report?
A copy of our 2015 Annual Report on Form 10-K and
a letter from Matthew Carter, Jr., our President and Chief Executive Officer, are available over the Internet or, if you received a printed copy of the proxy materials, are enclosed.
You may request another free copy of our Annual Report on Form 10-K for the year ended December 31, 2015 from:
Inteliquent, Inc.
Attn: Chief Financial Officer
550 West Adams Street, Suite 900
Chicago, Illinois 60661
(312) 384-8000
Alternatively, you can access our 2015 Annual
Report on Form 10-K at www.proxyvote.com. We will also furnish any exhibit to the 2015 Annual Report on Form 10-K if specifically requested.
Voting Information
What will I be voting on?
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Election of directors (see page 7).
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Ratification of the independent registered public accounting firm (see page 12).
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An advisory vote to approve named executive officer compensation (see page 13).
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An amendment to the Companys Amended and Restated Certificate of Incorporation to implement a majority voting standard in uncontested
elections of directors (see page 14).
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An amendment to the Companys Amended and Restated Certificate of Incorporation to provide that the Companys stockholders may remove any
director from office with or without cause (see page 15).
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Who is soliciting my vote?
Giving us your proxy means that you authorize the persons named as proxies on the proxy cardMatthew Carter, Jr. and
Kurt J. Abkemeier to vote your shares at the meeting in the manner you direct. You may vote for all, some, or none of our director nominees. You may also vote for or against the other proposals on the proxy card or abstain from voting. If you
sign and return the enclosed proxy card but do not specify how your shares are to be voted, your shares will be voted in accordance with the recommendations of our Board. If any other matters are properly presented at the annual meeting for
consideration, the persons named as proxies in the enclosed proxy card will vote as recommended by our Board or, if no recommendation is given, in their own discretion. Moreover, our Board reserves the right to adjourn or postpone the 2016 annual
meeting for failure to obtain a quorum, for legitimate scheduling purposes or based on other circumstances that, in our Boards belief, would cause such adjournments or postponements to be in the best interests of all of our stockholders.
How many directors can I vote for?
Our Board currently consists of eight directors. Stockholders can vote for up to eight nominees.
How does the Board recommend that I vote?
Our Board unanimously recommends you vote FOR each of the Boards eight nominees to the Board, FOR the ratification of Deloitte & Touche LLP as our independent
registered public accounting firm for the 2016 year, FOR the approval, on an advisory basis, of the compensation of our named executive officers as described in the Compensation Discussion and Analysis, executive compensation tables and
accompanying narrative disclosure in this proxy statement, FOR the amendment to the Companys Amended and Restated Certificate of Incorporation to implement a majority voting standard in uncontested elections of directors and
FOR the amendment to the Companys Amended and Restated Certificate of Incorporation to provide that the Companys stockholders may remove any director from office with or without cause.
How do I vote?
If you received a notice of electronic availability of proxy materials, you cannot vote your shares by filling out and returning the notice. The notice, however, provides information on how to vote by
Internet, by telephone or by requesting a paper proxy card or voting instruction card.
If you are a holder of
record (that is, your shares are registered in your own name with our transfer agent), you can vote either in person at the annual meeting, by proxy without attending the annual meeting or by Internet, telephone or mail. We urge you to vote by proxy
even if you plan to attend the annual meeting so that we will know as soon as possible that enough votes will be present for us to hold the meeting. If you attend the meeting in person, you may vote at the meeting and your proxy will not be counted.
If you hold your shares in street name, you must either direct the bank, broker or other record
holder of your shares as to how to vote your shares, or obtain a proxy from the bank, broker or other record holder to vote at the meeting. Please refer to the voting instruction cards used by your bank, broker or other record holder for specific
instructions on methods of voting, including by telephone or using the Internet if such services are offered by your bank, broker or other record holder.
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Your shares will be voted as you indicate. If you return the proxy card but
you do not indicate your voting preferences, then the individuals named on the proxy card will vote your shares FOR each of the eight directors nominated by the Board of Directors, FOR the ratification of Deloitte &
Touche LLP as our independent registered public accounting firm for the year ending December 31, 2016, FOR the approval, on an advisory basis, of the compensation of our named executive officers as described in the Compensation
Discussion and Analysis, executive compensation tables and accompanying narrative disclosure in this proxy statement, FOR the amendment to the Companys Amended and Restated Certificate of Incorporation to implement a majority
voting standard in uncontested elections of directors and FOR the amendment to the Companys Amended and Restated Certificate of Incorporation to provide that the Companys stockholders may remove any director from office with
or without cause. Our Board and management do not currently intend to present any matters at the annual meeting other than those outlined in the notice of the annual meeting. Should any other matter requiring a vote of stockholders arise,
stockholders returning the proxy card confer upon the individuals named on the proxy card discretionary authority to vote the shares represented by such proxy on any such other matter in accordance with their best judgment.
Can I change my vote or revoke my proxy?
Yes. To change your vote or revoke your proxy, simply sign, date and return the enclosed proxy card, or vote by telephone or via the Internet in accordance with the instructions on the notice of internet
availability of proxy materials or, if you received a printed copy of the proxy materials, the proxy card. Only your latest dated proxy will count at the annual meeting.
How many votes do I have?
You will have one vote
for every share of our common stock that you owned on March 23, 2016.
How many shares are entitled to vote?
There were 34,066,258 shares of our common stock outstanding as of the record date and entitled to vote at the meeting.
Each share is entitled to one vote.
How many shares must be present to hold the meeting?
Under our second amended and restated by-laws, holders of a majority of the outstanding shares of capital stock entitled
to vote must be present, in person or by proxy, to hold the annual meeting.
How many votes are needed for the proposals to pass?
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The eight nominees for director who receive the highest number of votes at the annual meeting in person or by proxy will be elected. If the shares
you own are held in street name by a bank, broker or other record holder, your bank, broker or other record holder is required to vote your shares according to your instructions.
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The affirmative vote of a majority of the shares present in person or by proxy must be cast in favor of the ratification of the appointment of the
independent registered public accounting firm.
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The affirmative vote of a majority of the shares present in person or by proxy is required for advisory approval of the Companys executive
compensation. The vote is advisory and
non-binding
in nature but our Compensation Committee will carefully consider the outcome of the vote when making future decisions regarding executive compensation
arrangements.
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The affirmative vote of 66-2/3% of the shares outstanding is required to approve the amendment to the Companys Amended and Restated
Certificate of Incorporation to implement a majority voting standard in uncontested elections of directors.
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The affirmative vote of 66-2/3% of the shares outstanding is required to approve the amendment to the Companys Amended and Restated
Certificate of Incorporation to provide that the Companys stockholders may remove any director from office with our without cause.
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What if I vote withhold or abstain?
In the election of directors (proposal one), you may vote FOR all or some of the nominees or you may vote to WITHHOLD with respect to one or more of the nominees. A vote to
WITHHOLD on the election of directors will not be considered to be a vote for or against a nominee and will have no effect on the outcome of the vote.
For the other items of business (proposals two, three, four and five), you may vote FOR, AGAINST
or ABSTAIN. A vote to ABSTAIN on these other items of business will have the same effect of a vote AGAINST. If you vote ABSTAIN, your shares will be counted as present for purposes of determining
whether enough votes are present to hold the annual meeting.
Is cumulative voting permitted for the election of directors?
No.
Are dissenters rights applicable to the matters being voted upon?
No.
What if I dont return my proxy card and dont attend the annual meeting?
If you are a holder of record and you dont vote your shares, your shares will not be voted.
If you hold your shares in street name, and you dont give specific voting instructions to
your bank, broker or other record holder, it will still be able to vote your shares with respect to certain discretionary items, but will not be allowed to vote your shares with respect to certain non-discretionary items. The
ratification of Deloitte & Touche LLP as our independent registered public accounting firm (proposal two) is considered to be a discretionary item under the applicable stock exchange rules and your bank, broker or other record holder will
be able to vote on that item even if it does not receive instructions from you, so long as it holds your shares in its name. The election of directors (proposal one) and the advisory vote to approve named executive officer compensation (proposal
three) are non-discretionary items. If you do not instruct your bank, broker or other record holder how to vote with respect to these items, your bank, broker or other record holder may not vote with respect to these proposals and those
votes will be counted as broker non-votes. Broker non-votes are shares that are held in street name by a bank, broker or other record holder that indicates on its proxy that it does not have or did not exercise
discretionary authority to vote on a particular matter. Broker
non-votes
will be included in determining the presence of a quorum at the annual meeting, but will not be counted for purposes of
voting on
non-discretionary
items. Broker non-votes will be equivalent to a vote AGAINST the proposal to amend the Companys Amended and Restated Certificate of
Incorporation to implement a majority voting standard in uncontested elections of directors (proposal four) and the proposal to amend the Companys Amended and Restated Certificate of Incorporation to provide that the Companys
stockholders may remove any director from office with or without cause (proposal five.)
What happens if a nominee for director declines
or is unable to accept election?
If you vote by proxy, and if unforeseen circumstances make it
necessary for our Board to substitute another person for a nominee, the individuals named on the proxy card will vote your shares for that other person.
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May I vote confidentially?
Subject to the exceptions provided below, our policy is to treat all stockholder meeting proxies, ballots and voting
tabulations of a stockholder confidentially, if the stockholder has requested confidentiality on the proxy or ballot.
If you so request, your proxy will not be available for examination and your vote will not be disclosed prior to the tabulation of the final vote at the annual meeting, except (i) to meet applicable
legal requirements, (ii) to allow the independent election inspectors to count and certify the results of the vote or (iii) if there is a proxy solicitation in opposition to our Board, based upon an opposition proxy statement filed with
the Securities and Exchange Commission (the SEC). The independent election inspectors may at any time inform us whether or not a stockholder has voted.
What should I do if I receive more than one set of voting materials?
You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more
than one brokerage account, you may receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than
one notice of Internet availability of proxy materials or, if you received a printed copy of the proxy materials, more than one proxy card. Please vote your shares applicable to each proxy card and voting instruction card that you receive.
Where can I find the voting results of the annual meeting?
We intend to announce the preliminary voting results at the annual meeting and publish the final results on a Form 8-K
within four business days of the annual meeting.
How may I view a list of Inteliquents stockholders?
A list of stockholders entitled to attend and vote at the 2016 annual meeting will be available for viewing during normal
business hours during the ten days preceding the date of the 2016 annual meeting at our offices located at:
550 West Adams
Street, Suite 900
Chicago, Illinois 60661
The list will be available for viewing also at the 2016 annual meeting. You must be a stockholder of Inteliquent and
present valid identification to view the list.
Stock Ownership Information
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
Most Inteliquent stockholders hold their shares through a bank, broker or other record holder rather than directly in
their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
Stockholder
of Record
If your shares are registered directly in your name with our transfer agent, Computershare Trust
Company, N.A. (Computershare), you are considered, with respect to those shares, the stockholder of record, and these
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proxy materials are being sent directly to you by us. As the stockholder of record, you have the right to grant your voting proxy directly to us or to a third party, to vote in person at the
meeting, or to vote by Internet, telephone or mail. If you received a printed copy of the proxy materials, we have enclosed a proxy card for you to use.
Beneficial Owner
If your shares are held in a brokerage
account or by another nominee, you are considered the beneficial owner of shares held in street name, and either a notice of Internet availability of proxy materials or these proxy materials, together with a voting instruction card on
behalf of your bank, broker or other record holder, are being forwarded to you. As the beneficial owner, you have the right to direct your bank, broker or other record holder how to vote and you also are invited to attend the annual meeting. Your
bank, broker or other record holder has enclosed or otherwise provided voting instructions for you to use in directing the bank, broker or other record holder how to vote your shares.
Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the meeting unless
you obtain a legal proxy from the bank, broker or other record holder that holds your shares, giving you the right to vote the shares at the meeting.
What if I have questions for Inteliquents transfer agent?
Please contact Computershare at (800) 962-4284 or address listed below, with questions concerning stock certificates, transfer of ownership or other matters pertaining to your stock account.
By Mail:
Computershare Investor Services
P.O. Box 43078
Providence, RI 02940-3078
By Overnight Delivery:
Computershare Investor Services
250 Royall Street
Canton, MA 02021
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PROPOSALS TO BE VOTED ON
Proposal No. 1: Election of Directors
Our Board of Directors has nominated eight nominees for election to our Board of Directors this year. Mr. Hynes has
served on our Board of Directors since our founding in 2001. Messrs. Ingeneri and Wren have served on our Board of Directors since 2006. Messrs. Greenberg and Samples have served on our Board of Directors since 2011. Mr. Beatty has served on
our Board of Directors since 2013. Ms. Wright has served on our Board of Directors since 2014. Mr. Carter has served on our Board of Directors since June 2015. Information regarding the business experience of each nominee is provided
below. Each director is elected annually to serve until the next annual meeting or until his successor is elected and qualified or until his earlier death, resignation or removal. There are no family relationships among our executive officers and
directors.
If you sign your proxy card or voting instruction card but do not give instructions with respect
to voting for directors, your shares will be voted for the eight persons recommended by the Board. If you wish to give specific instructions with respect to voting for directors, you may do so by indicating your instructions on your proxy card or
voting instruction card.
The biographies of each of the nominees below contains information regarding the
persons service as a director, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the
experiences, qualifications, attributes or skills that caused the Nominating and Corporate Governance Committee and the Board to determine that the person should serve as a director.
Each of the nominees has consented to being named as a nominee in this proxy statement and, if elected, to serve as a
member of our Board. In the event that any nominee should become unavailable or a vacancy on the Board is otherwise created, however, the proxy holders, Matthew Carter, Jr. and Kurt J. Abkemeier, will vote for a nominee or nominees designated by the
Board, unless the Board chooses to reduce the number of directors serving on the Board or leave the place vacant to be filed at a later time.
Our Nominating and Governance Committee is responsible for evaluating candidates for membership on our Board and recommending a proposed slate of nominees for consideration by the full Board. Our Board
understands our business and has deep and broad expertise and experience in the realms that we believe are critical to our future success, including the telecommunications industry and high technology. Our Board has also added four new independent
and qualified directors since 2011, a new Chief Financial Officer in January 2014, a new Chief Executive Officer in June 2015, and has conducted an extensive evaluation of our business. Our Board concluded that the nomination of the current
directors whose terms expire at the annual meeting is in Inteliquents best interests and that the current directors will continue to fairly and objectively consider the interests of Inteliquent and all of our stockholders in determining our
future direction.
Our Board recommends a vote FOR the election to the Board of Directors of
each of the following eight nominees.
Vote Required
The eight persons receiving the highest number of FOR votes represented by shares of our common stock present
in person or represented by proxy at the annual meeting will be elected.
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Nominees for Election
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James P. Hynes
Director since 2001
Age 68
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Mr. Hynes co-founded Inteliquent in 2001, and served as Chief Executive Officer until February 2006, after which he
became Executive Chairman. In December 2006, Mr. Hynes stepped down as Executive Chairman and assumed the title of Chairman of the Board, a position he holds today. Active in the industry for over 30 years, Mr. Hynes personally directed the
establishment of COLT Telecommunications in Europe as their first CEO in 1992. As Chairman of the Board, he led COLTs initial public offering in 1996. Mr. Hynes founded MetroRED Telecom in South America and Mexico, as well as KVH Telecom in
Tokyo. Concurrent with these operating roles, he was Group Managing Director at Fidelity Capital for ten years. His career has included senior positions with Chase Manhattan, Continental Corporation, Bache & Co. and New York Telephone. Mr. Hynes
is Chairman of the Board of Trustees of Iona College. He is also a Trustee of Cardinal Hayes High School in the Bronx, New York. Mr. Hynes holds a B.A. from Iona College and an MBA from Adelphi University.
Mr. Hynes is our longest-serving director and was our
first Chief Executive Officer. As one of our co-founders, Mr. Hynes is intimately familiar with our corporate culture and history. In addition, Mr. Hynes has 30-plus years of experience in the telecommunications industry and has served in leadership
roles at a number of major telecommunications organizations. His experience is invaluable to our Boards deliberations with respect to our strategic vision and the high technology aspects of our services. The Board is well served by Mr.
Hynes strong skills in finance, management and strategic planning.
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Matthew Carter, Jr.
Director Since 2015
Age 55
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Mr. Carter joined us in 2015 and serves as our President and Chief Executive Officer. Prior to joining Inteliquent,
Mr. Carter served in various roles at Sprint. From 2010 until November 2014, Mr. Carter served as President of Sprint Corporations Enterprise, Emerging and Wholesale Solutions business unit, which provides platform solutions serving a broad
range of industries and customers in over 165 countries. Prior to that, Mr. Carter served as President of Boost Mobile, part of Sprints prepaid group, from 2008 until 2010. Prior to that, Mr. Carter served as Senior Vice President of Base
Management at Sprint from 2006 until 2008. Prior to joining Sprint, Mr. Carter served in senior marketing roles at PNC Financial Services Group, Inc., Leap Wireless International, Inc., Royal Bank of Canada and BellSouth Corporation. Mr. Carter
serves on the board of directors of USG Corporation and Apollo Education Group Inc. Mr. Carter also serves on USGs Compensation and Organization Committee and Governance Committee as well as the Audit Committee and the Finance Committee of
Apollo Education Group, Inc. Mr. Carter holds a B.S. from Northwestern University in Radio, T.V. & Film and an MBA from Harvard Business School.
Mr. Carter has a wealth of experience in leading telecom sales organizations, which enables him to provide our Board with expert advice on
a wide range of issues related to the sale of our telecommunications offerings. From his tenure with Sprint, Mr. Carter also has a wealth of experience related to the developments of new services. This will enable him to provide our Board with
expert advice as the Company explores providing new services that are adjacent to our existing business. As our new Chief Executive Officer, Mr. Carter provides the Board with valuable insight into our day-to-day operations and achievements. Mr.
Carter also serves as a knowledgeable liaison between our Board and our senior management team.
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Joseph A. Beatty
Director Since 2013
Age 52
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Mr. Beatty has served as a Director since 2013. Mr. Beatty was the President and Chief Executive Officer and a board
member of Telular Corporation (NASDAQ: WRLS) from 2008 until its sale in June 2013. Prior to serving as Telulars President and Chief Executive Officer, Mr. Beatty served as its Executive Vice President (beginning in April 2007) and Chief
Financial Officer and Secretary (beginning in May 2007). From June 2003 until June 2006, Mr. Beatty was President and Chief Executive Officer of Concourse Communications Group, a privately held developer and operator of distributed antenna systems
and airport wi-fi networks. In June 2006, Concourse was sold to Boingo Wireless. From March 2001 until June 2003, Mr. Beatty worked with private equity firm Cardinal Growth L.P. on various acquisition projects and also acted as part-time Interim
Chief Financial Officer for Novaxess B.V., a privately held telecom services provider based in the Netherlands. From November 1996 until February 2001, Mr. Beatty was a co-founder and the Chief Financial Officer of Focal Communications Corporation,
a publicly held telecom services provider. Earlier in his career, Mr. Beatty was a securities analyst and also held numerous technical management positions for a local telecom services provider. In 2014, Mr. Beatty was appointed to serve as a member
of the board of directors of SITO Mobile LTD (NASDAQ: SITO), a technology-based mobile media solutions provider. Mr. Beatty is also the chairperson of SITO Mobiles Audit Committee, and a member of its Compensation Committee and Nominating and
Governance Committee. Mr. Beatty is a former Chairman and continues to serve on the board of trustees of Edward-Elmhurst Health Care, a not-for-profit healthcare provider located in suburban, Chicago, Illinois. He is also a director of EHSC Cayman
Segregated Portfolio, its captive insurance subsidiary, domiciled in the Cayman Islands. Finally, Mr. Beatty also serves as a director of two privately held companies, FourKites and CityScan, Inc. Mr. Beatty earned a B.S. in Electrical Engineering
from the University of Illinois and an MBA from the University of Chicagos Booth School of Business. He is also a Chartered Financial Analyst.
Mr. Beatty provides independent guidance to our Board on a wide variety of telecommunications matters based on his extensive management
and leadership experience in the telecommunications industry. Mr. Beattys strong background in finance and impressive experience as a member of senior management for a number of telecommunications companies enables him to provide our Board
with key expertise in financial matters and valuable insight regarding strategic opportunities.
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Edward M. Greenberg
Director Since 2011
Age 64
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Mr. Greenberg has served as a Director since 2011. Mr. Greenberg is currently a partner at RIME Communications Capital (RIME Communications), an
investment partnership focusing on the telecommunications, media and Internet sectors, and chairman of Broadway Near You. Mr. Greenberg founded RIME Communications in 2008 and Broadway Near You in 2010. Prior to RIME Communications, Mr. Greenberg
served in various roles at Morgan Stanley, which he joined in 1985. These roles included serving as a global telecommunications strategist and senior investment banker from 1998 to 2007, and as head of Morgan Stanleys global telecommunications
and media research team from 1994 to 1998. Prior to Morgan Stanley, Mr. Greenberg worked at Sanford C. Bernstein in investment research. Mr. Greenberg began his career as a regulator, working at the Federal Communications Commission and the National
Telecommunications and Information Agency. Mr. Greenberg served as a director of Teleglobe from 2002 to 2005, and graduated from the University of Wisconsin in 1972.
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Mr. Greenberg provides independent guidance to our Board on a wide variety of telecommunications matters based on his extensive experience in investing in
telecommunications, media and Internet companies. Mr. Greenbergs strong background in finance and knowledge of the challenges and opportunities in telecommunications industry provide our Board with key expertise in financial matters and
valuable insight regarding strategic opportunities.
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Lawrence M. Ingeneri
Director since 2006
Age 57
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Mr. Ingeneri has served as a Director since 2006. From 2003 to 2015, Mr. Ingeneri served as the Chief Financial
Officer of mindSHIFT Technologies, Inc., an IT managed services provider. mindSHIFT was acquired in December 2011 by Best Buy, Inc. (NYSE: BBY). Best Buy then sold mindSHIFT to Ricoh Americas Holding Inc. in February 2014. Prior to joining
mindSHIFT, Mr. Ingeneri was employed by COLT Telecom Group plc, or COLT, a European telecommunications services company from July 1996 to December 2002. Mr. Ingeneri was the Chief Financial Officer of COLT from July 1996 to June 2002 and a member of
the Board of Directors of COLT from June 2001 to June 2002. Mr. Ingeneri previously served as a director of mindSHIFT Technologies, Inc. Mr. Ingeneri holds a B.S. in Electrical Engineering from the U.S. Naval Academy and an MBA from Harvard Business
School.
Our Board benefits immensely from
Mr. Ingeneris experience as chief financial officer for two distinguished high technology companies. Mr. Ingeneris many years of executive experience in our industry and related skills in corporate finance enables him to provide valuable
perspective on general strategic and financial matters. Due to his executive and directorial service for a European telecommunications firm, Mr. Ingeneri is able to deliver important insights regarding any expansion that our Company considers with
respect to providing international telecommunications services.
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Timothy A. Samples
Director Since 2011
Age 58
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Mr. Samples has served as a Director since 2011. Since 2003, he has been a Principal at Sapience LLC, where he
performs consulting work. From 2001 to 2002, Mr. Samples served as Chief Executive Officer, President and Chairman of the Board of Management for Completel N.V., a Dutch registered competitive local exchange carrier. From 2000 to 2001, Mr. Samples
served as Chief Executive Officer and President of Firstmark Communications, a Pan-European broadband company with operations in seven Western European countries. From 1997 to 2000, Mr. Samples was the Chief Executive Officer of One2One, a GSM
service operator created through a joint venture between MediaOne Group and Cable & Wireless. From 1996 to 1997, Mr. Samples was responsible for the U.S. domestic wireless business for US West/MediaOne Group, including their investments in PCS
Primeco. From 1995 to 1996, Mr. Samples served as Vice President and General Manager for US West Cellular/Airtouch in Phoenix, Arizona. Prior to 1995, Mr. Samples held various management, sales and marketing positions with US West/MediaOne Group.
Mr. Samples has previously served on the boards of directors of Syniverse, Pac-West, Focal, Genesys and Kabira Technologies. Mr. Samples holds a B.A. in Psychology from the University of Toledo.
Mr. Samples provides independent guidance to our Board
on a wide variety of telecommunications matters. Mr. Samples draws on over 25 years of management and leadership experience in the telecommunications industry when advising our Board on key strategic decisions. Our Board also values Mr.
Samples experience and insight managing overseas telecommunications companies, in the event that our Company considers providing international telecommunications services.
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Rian J. Wren
Director since 2006
Age 59
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Mr. Wren has served as a Director since he joined us in February 2006. Mr. Wren served as Chief Executive Officer
from February 2006 until April 2011 and as our President from February 2006 until November 2010. Prior to joining us, Mr. Wren was Senior Vice President and General Manager of Telephony for Comcast Cable from November 1999 to August 2005. Mr. Wren
joined Comcast in 1999 and was named CEO of Broadnet, Comcasts international wireless company located in Brussels, Belgium in 2000. After returning to the United States, he served as the Senior Vice President and General Manager of Telephony
for Comcast Cable Division. Prior to joining Comcast, Mr. Wren held several senior management positions at AT&T from 1978 to 1999, including President of the Southwest Region, and worked in the Consumer, Business, Network Services, and Network
Systems Manufacturing divisions for more than 20 years. In 2016, Mr. Wren was appointed to serve as a member of the board of directors of Field Squared Inc. Mr. Wren holds a B.S. in Electrical Engineering from the New Jersey Institute of Technology
and an M.S. in Management from Stanford University, which he attended as a Sloan Fellow.
As our former Chief Executive Officer, Mr. Wren brings tremendous institutional knowledge to our Board. Mr. Wrens intimate familiarity with our Companys greatest challenges and opportunities
will continue to serve our Board well as it reflects on our strategic direction and evaluates operational achievements. Further, our Boards oversight of management benefits immensely from Mr. Wrens impressive experience as a member of
senior management of three major telecommunications companies. In addition to Mr. Wrens managerial background, our Board values Mr. Wrens insight regarding the high technology aspects of our business, stemming from his background in
electrical engineering.
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Lauren F. Wright
Director since 2014
Age 62
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Ms. Wright has served as a Director since 2014. Ms. Wright is the founder of Consulting That Works, a management
consultancy in New York City, where she has been a principal since 2011. Since 2013, Ms. Wright has also served as an adjunct instructor at New York University School of Professional Studies graduate programs. From 2007 to 2011, Ms. Wright
served as Senior Vice President of Global Business Operations of Comverse Technology, Inc., which she joined after serving as Special Advisor to the companys board of directors. Prior to joining Comverse, Ms. Wright served as a consultant and
held a variety of executive positions, including President and Chief Executive Officer of Pryor Resources, Inc., a venture-backed international seminar company which she managed through bankruptcy reorganization, and SVP/President of Sprint
International, a division of Sprint, a global telecommunications provider, where she worked from 1988 to 2000. Ms. Wright previously served on the boards of directors of Verint Systems, Inc. (NASDAQ:VRNT) where she was Chair of the Nominating and
Governance Committee, Call-Net, Inc. (TSE:CN), Global One (a joint venture among Sprint, Deutsche Telecom and France Telecom), Pryor Resources, Inc., and various nonprofit organizations. Ms. Wright graduated Phi Beta Kappa with a bachelors
degree in psychology from Johns Hopkins University and has an MBA from Harvard Business School.
Ms. Wright provides independent guidance to our Board on a wide variety of telecommunications matters based on her extensive management
and consulting experience in the telecommunications industry. Ms. Wrights strong background in finance and impressive experience in improving processes and operations management provide our Board with key expertise in financial and industry
matters, valuable insight regarding opportunities to grow our business, improve our operations and financial performance.
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Proposal No. 2: Ratification of Independent Registered
Public Accounting Firm
The Audit Committee of the Board has appointed Deloitte & Touche LLP as
the independent registered public accounting firm to audit our consolidated financial statements and internal control over financial reporting for the year ending December 31, 2016. During 2015, Deloitte & Touche LLP served as our
independent registered public accounting firm and also provided certain tax and other audit related services. See Principal Accountant Fees and Services on page 58. Representatives of Deloitte & Touche LLP are expected to attend
the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement.
Our Board recommends a vote FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for year 2016. If the appointment
is not ratified, our Audit Committee will consider whether it should select another independent registered public accounting firm.
Vote Required
Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for year 2016 requires the affirmative vote of a majority of the shares of our common
stock present in person or represented by proxy at the annual meeting.
12
Proposal No. 3: Advisory Vote to Approve Named Executive
Officer Compensation
The Companys executive compensation policies and decisions are intended to:
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implement compensation packages that are competitive with comparable organizations and allow us to attract and retain the best possible executive
talent;
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relate annual and long-term cash and stock incentives to achievement of measurable corporate and individual performance objectives;
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appropriately balance the mix of cash and non-cash short- and long-term compensation;
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encourage integrity in business dealings through the discretionary portion of our compensation package; and
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align executives incentives with long-term stockholder value creation.
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To implement these principles, the Compensation Committee, which is responsible for approving and administering the
compensation program for executive officers and certain senior employees, including our named executive officers, expects to maintain compensation plans that tie a substantial portion of executives overall compensation to our financial and
operational performance, as measured by metrics such as revenue, adjusted EBITDA and free cash flow, as more fully described herein, as well as key strategic goals such as the development of our network, the establishment and maintenance of
strategic relationships and the growth of our customer base. Due to the importance of their leadership, strategic planning and policymaking roles, our executives have a larger portion of their total compensation at risk and thus subject
to corporate and individual performance.
At each of our previous five annual meetings of stockholders, a
substantial majority of the votes cast on the advisory vote to approve named executive officer compensation were voted in favor of the proposal. The Compensation Committee believes this affirms stockholders support of our approach to executive
compensation.
We are asking for stockholder approval of the compensation of our named executive officers as
disclosed in this proxy statement in accordance with SEC rules, which disclosures include the information under Executive CompensationCompensation Discussion and Analysis, the compensation tables and the narrative discussion
following the compensation tables. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the policies and practices described in this proxy statement.
This vote is advisory and therefore not binding on the Company, the Compensation Committee or the Board. The
Board and the Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider those
stockholders concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
Our Board recommends a vote FOR the approval, on an advisory basis, of the following resolution:
RESOLVED: That the stockholders of Inteliquent, Inc. approve the compensation of the named executive officers as
described in the Compensation Discussion and Analysis, executive compensation tables and accompanying narrative disclosure in Inteliquent, Inc.s 2016 Proxy Statement.
Vote Required
The affirmative vote of a majority of the
shares present in person or by proxy is required for advisory approval of the Companys executive compensation. The vote is advisory and non-binding in nature but our Compensation Committee will carefully consider the outcome of the vote when
making future decisions regarding executive compensation arrangements.
13
Proposal No. 4: Amendment to the Companys Amended and
Restated Certificate of Incorporation to Implement a Majority Voting Standard in Uncontested Elections of Directors
Our Amended and Restated Certificate of Incorporation currently provides that elections of directors shall be determined by a plurality of the votes cast by the stockholders entitled to vote. Under this
plurality voting standard, director nominees receiving the highest number of FOR votes will be elected, regardless of the number of WITHHOLD votes received. At this annual meeting, the existing plurality voting standard will
continue to apply.
Stockholders are being asked at this annual meeting to approve and adopt an amendment to
our Amended and Restated Certificate of Incorporation to replace the plurality voting standard with a majority voting standard for uncontested elections of directors. If approved, this proposal would amend Article Six, Section 2 of our Amended
and Restated Certificate of Incorporation to implement a majority voting standard in uncontested elections of directors beginning with the 2017 annual meeting of stockholders. As a result, all director nominees in uncontested elections would be
required to receive a number of FOR votes representing at least a majority of votes cast in the election. If such a director nominee fails to receive FOR votes representing at least a majority of votes cast and is an
incumbent director, the Amended and Restated Certificate of Incorporation would require the director to promptly tender his or her resignation to our Board of Directors, subject to acceptance by our Board. The Nominating and Corporate Governance
Committee of our Board would then be charged with making a recommendation to our Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. In contested elections, where the number of nominees exceeds
the number of directors to be elected, the plurality voting standard would continue to apply. This summary of the proposed amendment to our Amended and Restated Certificate of Incorporation is qualified in its entirety by reference to the text of
the proposed amendment attached as Appendix A to this proxy statement.
Our Board has approved the amendment
to our Amended and Restated Certificate of Incorporation to implement a majority voting standard in uncontested elections of directors, subject to and conditioned upon stockholder approval at this annual meeting.
On the recommendation of the Nominating and Corporate Governance Committee of our Board, our Board is submitting this
proposal to our stockholders as part of its ongoing evaluation of its corporate governance practices. After careful consideration of the issue, our Board has determined to recommend a vote for the approval of this proposal. In determining whether to
recommend adopting a majority voting standard for uncontested elections of directors to our stockholders, our Board analyzed current corporate governance trends and considered the arguments in favor of and against maintaining the existing plurality
voting standard. Our Board recognizes that many of our peer public companies have amended their governing documents to provide for a majority voting standard rather than a plurality standard. Our Board believes that generally requiring directors to
be elected by a majority of votes cast both ensures that only director nominees with broad acceptability among our voting stockholders will be elected and enhances the accountability of each elected director to our stockholders. Our Board has also
considered the unsolicited request of one of our long-term stockholders, who asked that we consider a majority voting standard because majority voting, in its view, better enables stockholders to hold boards and members of management accountable.
Accordingly, after careful consideration, our Board has determined that it would be in the best interests of our stockholders to amend our Amended and Restated Certificate of Incorporation to implement a majority voting standard for uncontested
elections of directors.
Our Board recommends a vote FOR amendment to the Companys
Amended and Restated Certificate of Incorporation to Implement a Majority Voting Standard in Uncontested Elections of Directors.
Vote
Required
The affirmative vote of 66-2/3% of the shares outstanding is required to approve the amendment to
the Companys Amended and Restated Certificate of Incorporation to implement a majority voting standard in uncontested elections of directors.
14
Proposal No. 5: Amendment to the Companys Amended
and Restated Certificate of Incorporation to Provide That the Companys Stockholders May Remove Any Director From Office With or Without Cause
Our Amended and Restated Certificate of Incorporation currently provides that the Companys stockholders may remove directors only for cause. Recent judicial interpretations have confirmed that the
Delaware General Corporation Law, as applicable to corporations without a classified Board of Directors (such as the Company), grants stockholders the right to remove directors from office with or without cause. The proposed amendment to the
Companys Amended and Restated Certificate of Incorporation is intended to conform the certificate of incorporation to the requirements of Delaware law as applicable to the Company.
Stockholders are being asked at this annual meeting to approve and adopt an amendment to our Amended and Restated
Certificate of Incorporation to remove the for cause requirement for the Companys stockholders to remove directors. If approved, this proposal would amend Article Six, Section 4 of our Amended and Restated Certificate of
Incorporation to remove the words for cause. As a result, stockholders would be permitted to remove directors with or without cause. This summary of the proposed amendment to our Amended and Restated Certificate of Incorporation is
qualified in its entirety by reference to the text of the proposed amendment attached as Appendix A to this proxy statement.
On the recommendation of the Nominating and Corporate Governance Committee, our Board has approved the amendment to our Amended and Restated Certificate of Incorporation to provide that the Companys
stockholders may remove any director from office with or without cause, subject to and conditioned upon stockholder approval at this annual meeting.
Our Board recommends a vote FOR amendment to the Companys Amended and Restated Certificate of Incorporation to provide that the Companys stockholders may remove any director
from office with or without cause.
Vote Required
The affirmative vote of 66-2/3% of the shares outstanding is required to approve the amendment to the Companys
Amended and Restated Certificate of Incorporation to provide that the Companys stockholders may remove any director from office with our without cause.
15
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board Composition
Our amended and restated certificate of incorporation provides that our Board shall consist of such number of directors
as determined from time to time by resolution adopted by a majority of the total number of directors then in office. Our Board consisted of six members until our Board appointed Mr. Beatty as a member of our Board on April 4, 2013. Our
Board consisted of seven members until our Board appointed Ms. Wright as a member of our Board on April 10, 2014. Following our 2015 Annual Meeting, the size of our Board was reduced to seven members and consisted of seven members until
our Board appointed Mr. Carter effective June 22, 2015. Our Board currently consists of eight members.
Any additional directorships resulting from an increase in the number of directors may be filled by the directors then in office. The term of office for each director will be until his successor is
elected and qualified or until his earlier death, resignation or removal. Elections for directors will be held annually.
Criteria considered by the Nominating and Corporate Governance Committee in the nomination of directors include:
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the independence, judgment, strength of character, reputation in the business community, ethics and integrity of the individual;
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the business or other relevant experience, skills and knowledge that the individual may have that will enable him or her to provide effective
oversight of our business;
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the fit of the individuals skill set and personality with those of the other Board members so as to build a Board that works together
effectively and constructively;
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the individuals ability to devote sufficient time to carry out his or her responsibilities as director in light of his or her occupation and
the number of boards of directors of other public companies on which he or she serves; and
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the differences of viewpoint, professional experience, education, skill and other qualities or attributes that each nominee possesses that
contribute to board heterogeneity and diversity.
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For a description of each of the
Boards nominees skills and experiences, refer to Proposal No. 1: Election of Directors above.
Our Board met five times in 2015. Directors are expected to attend Board meetings and meetings of committees on which they serve, and to spend the time needed and meet as frequently as necessary to
properly discharge their responsibilities. During 2015, all of the directors attended 75% or more of the meetings of the Board and the committees on which they then served. Directors are encouraged to attend the annual meeting of stockholders. G.
Edward Evans, then the Companys interim Chief Executive Officer, represented our Board at our 2015 annual meeting of stockholders.
Board Leadership Structure
. The Chairman of the Board and our Chief Executive Officer are separate positions and are filled by different individuals. The Chairman, Mr. Hynes, is a co-founder
of our Company, was previously our Chief Executive Officer until February 2006 and has been active in the industry for over 30 years. The Chief Executive Officer is responsible for setting our strategic direction and overseeing our
day-to-day
performance. The Chairman of the Board provides guidance to the Chief Executive Officer and sets the agenda for the Board meetings. The Board believes that its
current leadership structure is appropriate at this time. In particular, the structure capitalizes on Mr. Hynes extensive experience in the telecommunications industry, while retaining separation of the Chairman of the Board and Chief
Executive Officer leadership roles to enhance the Boards independence from management.
16
Board Independence
. The Board has determined that each of the
directors, with the exception of Mr. Carter, qualifies as independent as independence is defined by Rule 5605(a)(2) of the Nasdaq Stock Market LLC (Nasdaq) marketplace rules. The Board has not adopted categorical
standards in making its determination of independence and instead relies on standards set forth in the Nasdaq marketplace rules.
Communication with the Board of Directors
You may communicate with the Board by directing communications to the Corporate Secretary and should prominently indicate
on the outside of the envelope that the communication is intended for the Board or for individual directors. In accordance with instructions from the Board, the Chief Financial Officer will review all communications, will organize the communications
for review by the Board and will promptly forward communications (other than communications unrelated to the our operations, such as advertisements, mass mailings, solicitations and job inquiries) to the Board or individual directors.
In addition, the Audit Committee of our Board has established a procedure for parties to submit concerns regarding
what they believe to be questionable accounting, internal accounting controls, and auditing matters. Concerns may be reported through our Compliance Hotline at
1-888-291-6431
, or through a confidential web form, available at
http://ir.inteliquent.com/contactBoard.cfm
. Concerns may be submitted anonymously and confidentially.
Board Committees
We currently have an Audit Committee, a Compensation Committee and a Nominating and
Corporate Governance Committee. Our Audit Committee consists of four persons and our Compensation Committee and Nominating and Corporate Governance Committee each consist of three. All of the members of our Audit Committee, Compensation Committee
and Nominating and Corporate Governance Committee are independent as independence is defined by Rule 5605(a)(2) of the Nasdaq marketplace rules and the rules of the SEC. In addition, from time to time, our Board may form special
committees and provide additional compensation to directors for their service to our Board on such committees.
Audit Committee
. Since May 2014, the Audit Committee has been comprised of Messrs. Beatty (Chairman), Ingeneri,
Samples and Ms. Wright, each of whom are considered independent under the heightened independence standard required for audit committee members under the Nasdaq marketplace rules and the rules of the SEC. The Audit Committee is
responsible for reviewing our risk assessment and risk management policies, and meets with management and auditors to discuss significant risks to our Company and the steps being taken to reduce such risks. The Audit Committee also oversees our
accounting, financial reporting and control processes and the audits of our financial statements, including: the preparation, presentation and integrity of our financial statements; our compliance with legal and regulatory requirements; our
independent auditors qualifications and independence; and the performance of our independent auditor. Our Audit Committee, among other things, has sole responsibility to retain and terminate our independent auditor, pre-approves all audit and
non-audit services
performed by our independent auditor and the fees and terms of each engagement and reviews our quarterly and annual audited financial statements and related public disclosures, earnings press releases and other financial
information provided to analysts or rating agencies.
Each member of the Audit Committee has the
ability to read and understand fundamental financial statements. Our Board has determined that Messrs. Beatty, Ingeneri and Ms. Wright meet the requirements for an audit committee financial expert as defined by the rules of the SEC.
The charter of the Audit Committee is available in the Investor Relations section of our website at
www.inteliquent.com.
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Compensation Committee
. Since May 2014, the Compensation Committee
has been comprised of Messrs. Samples (Chairman), Greenberg and Ms. Wright, each of whom are considered independent under the heightened independence standard required for compensation committee members under the Nasdaq marketplace
rules and the rules of the SEC. The Compensation Committee oversees the administration of our benefit plans, reviews and administers compensation arrangements for executive officers and directors and establishes and reviews general policies relating
to the compensation and benefits of our officers, employees and directors. Our executive officers make recommendations regarding executive compensation to the Compensation Committee, but do not participate in the Compensation Committees
decisions on executive compensation. Our human resources department supports the Compensation Committee in the administration of the benefit plans and compensation arrangements.
The charter of the Compensation Committee allows the Compensation Committee to engage compensation consultants as it
deems appropriate. During 2015, the Compensation Committee retained Pearl Meyer & Partners (Pearl Meyer) as an independent compensation consultant to assist us in evaluating and updating certain aspects of our equity
compensation practices and conducting a competitive review of long-term incentive compensation for our named executive officers in order to strengthen our compensation programs. See Compensation Discussion and AnalysisOverview of
Compensation Methodology below.
The charter of the Compensation Committee is available in the
Investor Relations section of our website at
www.inteliquent.com
.
Nominating and Corporate
Governance Committee
. Since May 2014, the Nominating and Corporate Governance Committee is comprised of Messrs. Greenberg (Chairman), Beatty and Ingeneri. The Nominating and Corporate Governance Committees responsibilities include
identifying and recommending to the Board appropriate director nominee candidates and providing oversight with respect to corporate governance matters.
The policy of the Nominating and Corporate Governance Committee is to consider individuals recommended by stockholders for nomination as a director in accordance with the procedures described under
Other MattersStockholder Proposals and Director Nominations. The Nominating and Corporate Governance Committee will consider all nominees for election as our directors, including all nominees recommended by stockholders, in
accordance with the mandate contained in its charter. In evaluating candidates, the Nominating and Corporate Governance Committee considers the differences of viewpoint, professional experience, education, skill and other qualities or attributes
that each nominee possesses to contribute to Board heterogeneity and diversity. The Nominating and Corporate Governance Committee also considers each nominees independence, judgment, strength of character, reputation in the business community,
ethics, integrity, business or other relevant experience, skills and industry knowledge, among other criteria listed under Board of Directors and Corporate GovernanceBoard Composition above. The Nominating and Corporate Governance
Committee will review all candidates in the same manner, regardless of the source of the recommendation. The Nominating and Corporate Governance Committee will select qualified candidates and review its recommendations with the Board.
We have not paid a fee to any third party to identify or assist in identifying or evaluating potential nominees, other
than with respect to Ms. Wright, who was appointed to serve on the Board in April 2014. In connection with that appointment, we engaged and paid a fee to the search firm of Spencer Stuart to assist us in identifying and evaluating potential
nominees.
Our Board has adopted Corporate Governance Guidelines that, along with our amended and
restated certificate of incorporation, our amended and restated by-laws and the charters of the Board committees, provide the framework for the governance of our Company. The Nominating and Corporate Governance Committee is responsible for
periodically reviewing the Guidelines and recommending any proposed changes to the Board for approval. The Corporate Governance Guidelines are available in the Investor Relations section of our website at
www.inteliquent.com
.
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The charter of the Nominating and Corporate Governance Committee is
available in the Investor Relations section of our website at
www.inteliquent.com
.
The
following table shows the membership of each committee during 2015 and the number of meetings held by each committee in 2015:
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Name of Director
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Audit Committee
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Compensation
Committee
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Nominating and
Corporate
Governance
Committee
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Joseph A. Beatty
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Chairman
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Member
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Matthew Carter, Jr.
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Edward M. Greenberg
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Member
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Chairman
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James P. Hynes
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Lawrence M. Ingeneri
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Member
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Member
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Timothy A. Samples
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Member
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Chairman
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Rian J. Wren
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Lauren F. Wright
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Member
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Member
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Number of Meetings in 2015
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5
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3
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4
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In addition to the number of formal meetings set forth above, our Board and certain of
its committees met regularly in informal meetings to discuss relevant items.
Compensation
Committee Interlocks and Insider Participation
No current member of the Compensation Committee has served
as an officer or employee of the Company. No member of our Compensation Committee serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or
Compensation Committee. See Certain Relationships and Related Transactions below for a description of our policy concerning transactions with related persons.
Code of Ethics
We have
adopted a code of ethics for senior financial employees that applies to our Chief Executive Officer, Chief Financial Officer, principal accounting officer and other employees. The code of ethics is available in the Investor Relations section of our
website at
www.inteliquent.com
and is available in print to any stockholder who
requests it. If we waive any material provision of our code of ethics or substantively change the code, we will disclose that fact on our website within
four business days of the waiver or substantive change.
The Boards Role in Risk
Oversight
The Boards role in the risk oversight process includes receiving regular updates and
reports from members of senior management on areas of material risk to our Company, including operational, financial, regulatory, strategic and reputational risks. The full Board or, if appropriate, one of its committees receives these updates and
reports from the senior managers responsible for the oversight of particular risks within our Company. These updates and reports enable the Board to understand and implement our risk identification, risk management and risk mitigation strategies.
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EXECUTIVE OFFICERS
Our executive officers are elected by the Board annually to hold office until their successors are elected and qualified.
Our executive officers are currently as follows:
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Matthew Carter, Jr.
Chief Executive Officer
Age 55
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For biographical information for Matthew Carter, Jr., see Proposal No. 1: Election of Directors above.
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Kurt J. Abkemeier
Chief Financial Officer and Executive Vice President Age 46
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Mr. Abkemeier joined us in 2014 and has served as our Chief Financial Officer and Executive Vice President since that time. In 2013, Mr. Abkemeier served in
the finance unit of CiG Wireless, Inc. From 2005 to 2012, Mr. Abkemeier served as the Vice President of Finance and Treasurer of Cbeyond, Inc. Prior to Cbeyond, Inc., Mr. Abkemeier was the Director of Finance and Strategic Planning at AirGate PCS,
Inc., a regional wireless telecommunications service provider. Mr. Abkemeier also held various senior management positions within telecommunications-related companies and was a senior sell-side research analyst at J.P. Morgan & Co. analyzing
telecommunications companies. Mr. Abkemeier holds a B.S. in Applied Economics from Cornell University.
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John T. Bullock
Chief Technology Officer and Executive Vice President of Network Operations
Age
54
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Mr. Bullock joined us in 2004 and has served as our Chief Technology Officer and Executive Vice President of Network Operations since November 2015. Mr.
Bullock served as our Chief Technology Officer from 2011 until November 2015. Prior to 2011, Mr. Bullock held a variety of technical leadership roles, including serving as our Senior Vice President of Network Operations and Engineering beginning in
2008. Mr. Bullock has over 30 years of telecommunications experience. Since joining us, Mr. Bullock was instrumental in building our tandem switching network from serving just two markets to now serving nearly the entire U.S. Prior to joining us,
Mr. Bullock held various technical leadership roles with MCI, WorldCom, MFS and Sprint/CenTel. Today, Mr. Bullock serves on the board of the Alliance for Telecommunications Industry Solutions (ATIS), a not-for-profit that helps develop standards and
solutions for information and communications technology. Mr. Bullock holds a B.A. in Telecommunications Management from DePaul University.
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John R. Harrington
Senior Vice President, Litigation, Regulatory and Human Resources
Age
47
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|
Mr. Harrington joined us in 2011 and has served as a Senior Vice President since that time. Mr. Harrington is responsible for all of our litigation and
regulatory advocacy, as well as our human resources function. From 1997 to 2011, Mr. Harrington practiced at the law firm of Jenner & Block LLP. From 2003 to 2011, Mr. Harrington served as a partner in Jenner & Block LLPs litigation
department. Mr. Harrington also served as a co-chair of the Jenner & Block LLPs communications practice and served as our primary outside litigation and regulatory counsel. Since 2014, Mr. Harrington has served as a member of the board of
directors of Onward Neighborhood House, a not-for-profit based in Chicago, Illinois. Mr. Harrington holds a B.A. from Northwestern University and a J.D., magna cum laude, from Indiana Universitys Maurer School of Law.
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Richard L. Monto
General Counsel, Secretary and Senior Vice President, External Affairs
Age
51
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|
Mr. Monto joined us in 2007, and has served as our General Counsel and Corporate Secretary since February 2008. Mr. Monto has 20 years of diversified
telecommunications experience. From 2001 to 2005, Mr. Monto held senior positions, including Chief Legal Officer, with Universal Access Global Holdings Inc. From 1995 to 2000, Mr. Monto held various legal positions with
MCI
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20
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Telecommunications. Prior to MCI, Mr. Monto practiced for several years at private law firms, including the law firm of Sonnenschein, Nath and Rosenthal (now
known as Dentons). Mr. Monto holds a B.A. from the University of Michigan in Russian and Eastern European Studies and a J.D. from the Boston University School of Law.
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Michelle R. Owczarzak
Senior Vice President, Sales
Age 48
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|
Ms. Owczarzak joined us in 2016 and has served as our Senior Vice President, Sales since January 2016. Prior to joining Inteliquent, Ms. Owczarzak served in a
variety of senior sales positions over an eight-year period at FairPoint Communications. From December 2012 until May 2015, Ms. Owczarzak served as Vice President, Wholesale Sales, where she served as a member of Fairpoints Senior Leadership
Team and was responsible for the totality of strategy and execution for Fairpoints wholesale sales channel. Prior to that, Ms. Owczarzak served as Assistant Vice President, Wholesale Sales from June 2007 until December 2012. Ms. Owczarzak has
more than 20 years of telecommunications experience and expertise in various sales roles including strategic planning and sales leadership. Prior to her time at Fairpoint, Ms. Owczarzak held positions at Level 3 Communications. TelCove, Inc., and
AT&T. Ms. Owczarzak holds a B.A. in Policy and Management studies from Dickinson College and a Masters degree in Public and International Affairs from the University of Pittsburgh.
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John M. Schoder
Chief Marketing Officer and Executive Vice President
Age 45
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|
Mr. Schoder joined us in 2013 and has served as our Executive Vice President and Chief Marketing Officer since January 2016. From January 2015 until January
2016, Mr. Schoder served as our Executive Vice President of Sales, Product & Marketing. From 2013 to 2015, Mr. Schoder served as our Senior Vice President of Product. Mr. Schoder has approximately 20 years of telecommunications experience. Prior
to joining Inteliquent, Mr. Schoder held various positions at Level 3 Communications from 2003 to 2013, including serving as a Vice President of Wholesale Long Distance Services and as a Senior Director, Voice Product Management. Prior to Level 3,
Mr. Schoder was a Director of International Product Management at Qwest Communications. Prior to Qwest, Mr. Schoder held various management positions with several telecommunications companies. Mr. Schoder holds a Bachelor of Science degree in
History from Georgetown Universitys School of Foreign Service and a Master of Arts degree in International Economics from The Johns Hopkins University.
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Brett A. Scorza
Chief Information Officer and Executive Vice President of Information Technology and Product Development
Age 47
|
|
Mr. Scorza joined us in 2004 and has served as our Chief Information Officer and Executive Vice President of Information Technology & Product Development
since November 2015. Mr. Scorza served as our Chief Information Officer from 2011 until November 2015. Prior to 2011, Mr. Scorza held positions overseeing our domestic products and information systems, including serving as our as Senior Vice
President of Information Systems from 2008 to 2011. Mr. Scorza has over 20 years of information technology and telecommunications experience. Mr. Scorza has responsibility for our Information Technology and Billing organizations, and was
instrumental in the implementation of our billing, reporting and back office functions. From 1997 to 2004, Mr. Scorza held senior positions, including Vice President of Information Technology, with Focal Communications, Inc. Prior to Focal, Mr.
Scorza held various technical and management positions with MFS Communications and Andersen Consulting. Mr. Scorza holds a B.S. in Electrical Engineering from the University of Illinois.
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21
COMMON STOCK OWNERSHIP
Beneficial Ownership Table
The following table provides information concerning beneficial ownership of our common stock as of March 23, 2016
by:
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|
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each of our named executive officers;
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|
|
|
each person known by us to beneficially own 5% or more of our outstanding common stock; and
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|
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all of our directors and executive officers as a group.
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The following table lists the number of shares and percentage of shares beneficially owned based on 34,066,258 shares of
common stock outstanding as of March 23, 2016. Beneficial ownership is determined in accordance with the rules of the SEC, and generally includes voting power and/or investment power with respect to the securities held. Shares of common stock
subject to options currently exercisable or exercisable within 60 days of March 23, 2016 are deemed outstanding and beneficially owned by the person holding such options for purposes of computing the number of shares and percentage beneficially
owned by such person, but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person. Except as indicated in the footnotes to this table, and subject to applicable community property laws, the persons
or entities named have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them. Except as otherwise set forth below, the street address of each beneficial owner is c/o Inteliquent, Inc.,
550 West Adams Street, Suite 900, Chicago, Illinois 60661.
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Shares of Common Stock
Beneficially Owned
|
|
Name and Address of Beneficial Owner
|
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Number
|
|
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Percentage
|
|
Holders of more than 5% of our voting securities
|
|
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BlackRock, Inc.
(1)
55 East 52nd Street
New York, NY 10022
|
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3,130,973
|
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|
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9.2
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%
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Vanguard Group
(2)
100 Vanguard Blvd.
Malvern, PA 19355
|
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2,452,612
|
|
|
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7.2
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%
|
Numeric Investors LLC
(3)
470 Atlantic Avenue, 6th Floor
Boston, MA 02210
|
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1,695,871
|
|
|
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5.0
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%
|
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Directors and named executive officers
|
|
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|
|
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Kurt J. Abkemeier
(4)
|
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66,035
|
|
|
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*
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Joseph A. Beatty
(5)
|
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40,620
|
|
|
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*
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John T. Bullock
(6)
|
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96,444
|
|
|
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*
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Matthew Carter, Jr.
(7)
|
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31,149
|
|
|
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*
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Edward M. Greenberg
(9)
|
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6,956
|
|
|
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*
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James P. Hynes
(10)
|
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509,751
|
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1.5
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%
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Lawrence M. Ingeneri
(11)
|
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91,631
|
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|
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*
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Timothy A. Samples
(12)
|
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13,246
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|
|
|
*
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John M. Schoder
(13)
|
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52,794
|
|
|
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*
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Brett A. Scorza
(14)
|
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104,159
|
|
|
|
*
|
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Rian J. Wren
(15)
|
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523,688
|
|
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1.5
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%
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Lauren F. Wright
(16)
|
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12,441
|
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*
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G. Edward Evans
(8)
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0
|
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*
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All directors and executive officers as a group (16 persons)
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1,859,165
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5.5
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%
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22
(1)
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According to a Schedule 13G/A filed with the SEC on January 22, 2016 by BlackRock, Inc. and its subsidiaries BlackRock Advisors, LLC, BlackRock
Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management Schweiz AG, BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock Investment Management, LLC and BlackRock Japan Co
Ltd. (collectively, BlackRock), as of December 31, 2015, BlackRock is the beneficial owner of 3,130,973 shares, as to which it has sole voting power as to 3,064,489 shares and sole dispositive power as to 3,130,973 shares.
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(2)
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According to a Schedule 13G/A filed with the SEC on February 10, 2016 by Vanguard Group Inc. (Vanguard), as of December 31,
2014, Vanguard is the beneficial owner of 2,452,612 shares, as to which it has sole voting power as to 56,043 shares and sole dispositive power as to 2,398,769 shares.
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(3)
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According to a Schedule 13G filed with the SEC on January 28, 2016 by Numeric Investors LLC (the Investment Manager) and Man Group
plc (the Parent Company), the Investment Manager serves as investment manager to certain funds and/or managed accounts (the Numeric Funds) that hold 1,695,871 shares. The Investment Manager, which serves as the investment
manager to each of the Numeric Funds, may be deemed to be the beneficial owner of all shares owned by the Numeric Funds. The Parent Company, which indirectly, through various intermediary entities, controls the Investment Manager, may be deemed to
be the beneficial owner of all shares held by the Numeric Funds. The Parent Companys address is Riverbank House, 2 Swan Lane, London EC4R 3AD, United Kingdom.
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(4)
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Consists of (a) 25,962 shares of common stock owned by Mr. Abkemeier and (b) 30,000 shares of restricted stock owned by
Mr. Abkemeier, which will vest on an annual basis through January 20, 2018 (c) 3,632 shares of restricted stock owned by Mr. Abkemeier, which will vest on an annual basis through March 13, 2019, (d) 2,980 shares of
restricted stock owned by Mr. Abkemeier, which will vest on an annual basis through February 22, 2020 and (e) 3,461 shares subject to options that are exercisable within 60 days of March 23, 2016.
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(5)
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Consists of (a) 30,000 shares of common stock owned by Mr. Beatty and (b) 2,741 shares of restricted stock owned by Mr. Beatty,
which will vest on May 19, 2016 and (c) 7,879 shares subject to options that are exercisable within 60 days of March 23, 2016.
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(6)
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Consists of (a) 7,634 shares of common stock owned by Mr. Bullock, (b) 1,030 shares of restricted stock owned by Mr. Bullock,
which will vest on an annual basis through March 15, 2017, (c) 2,941 shares of restricted stock owned by Mr. Bullock, which will vest on an annual basis through September 19, 2017, (d) 1,642 shares of restricted stock owned
by Mr. Bullock, which will vest on an annual basis through March 17, 2018, (e) 20,877 shares of restricted stock owned by Mr. Bullock, which will vest on May 20, 2017, (f) 1,877 shares of restricted stock owned by
Mr. Bullock, which will vest on an annual basis through March 13, 2019, (g) 2,980 shares of restricted stock owned by Mr. Bullock, which will vest on an annual basis through February 22, 2020 and (h) 57,463 shares
subject to options that are exercisable within 60 days of March 23, 2016.
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(7)
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Consists of (a) 5,336 shares of common stock owned by Mr. Carter, (b) 16,874 shares of restricted stock owned by Mr. Carter,
which will vest on an annual basis through June 22, 2019, (c) 8,939 shares of restricted stock owned by Mr. Carter, which will vest on an annual basis through February 22, 2020.
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(8)
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Mr. Evans does not own any shares of common stock as of March 23, 2016.
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(9)
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Consists of (a) 1,474 shares of common stock owned by Mr. Greenberg and (b) 5,482 shares of restricted stock owned by
Mr. Greenberg, which will vest on May 19, 2019.
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(10)
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Consists of (a) 504,269 shares of common stock owned by Mr. Hynes and (b) 5,482 shares of restricted stock owned by Mr. Hynes,
which will vest on May 19, 2019.
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(11)
|
Consists of (a) 86,149 shares of common stock owned by Mr. Ingeneri and (b) 5,482 shares of restricted stock owned by
Mr. Ingeneri, which will vest on May 19, 2019.
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(12)
|
Consists of (a) 7,764 shares of common stock owned by Mr. Samples and (b) 5,482 shares of restricted stock owned by Mr. Samples,
which will vest on May 19, 2019.
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(13)
|
Consists of (a) 10,086 shares of common stock owned by Mr. Schoder, (b) 5,000 shares of restricted stock owned by Mr. Schoder,
which will vest on an annual basis through November 25, 2017, (c) 7,500 shares of
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23
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restricted stock owned by Mr. Schoder, which will vest on an annual basis through November 24, 2018, (d) 22,500 shares of restricted stock owned by Mr. Schoder, which will
vest on an annual basis through January 30, 2019, (e) 2,421 shares of restricted stock owned by Mr. Schoder, which will vest on an annual basis through March 13, 2019, (f) 2,980 shares of restricted stock owned by
Mr. Schoder, which will vest on an annual basis through February 22, 2020 and (g) 2,307 shares subject to options that are exercisable within 60 days of March 23, 2016.
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(14)
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Consists of (a) 8,691 shares of common stock owned by Mr. Scorza, (b) 1,030 shares of restricted stock owned by Mr. Scorza,
which will vest on an annual basis through March 15, 2017, (c) 2,941 shares of restricted stock owned by Mr. Scorza, which will vest on an annual basis through September 19, 2017, (d) 1,642 shares of restricted stock owned
by Mr. Scorza, which will vest on an annual basis through March 17, 2018, (e) 20,877 shares of restricted stock owned by Mr. Scorza, which will vest on May 20, 2017, (f) 1,877 shares of restricted stock owned by
Mr. Scorza, which will vest on an annual basis through March 13, 2019, (g) 2,980 shares of restricted stock owned by Mr. Scorza, which will vest on an annual basis through February 22, 2020 and (h) 64,121 shares subject
to options that are exercisable within 60 days of March 23, 2016.
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(15)
|
Consists of (a) 68,206 shares of common stock owned by Mr. Wren and (b) 5,482 shares of restricted stock owned by Mr. Wren,
which will vest on May 19, 2019 and (c) 450,000 shares subject to options that are exercisable within 60 days of March 23, 2016.
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(16)
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Consists of (a) 6,959 shares of common stock owned by Ms. Wright and (b) 5,482 shares of restricted stock owned by Ms. Wright,
which will vest on May 19, 2019.
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Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the Exchange
Act), as amended, requires our directors, executive officers and holders of more than 10% of our common stock to file reports with the SEC regarding their ownership and changes in ownership of our securities. These persons and entities are
also required by the SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on representations and information provided to us by the persons required to make such filings, we believe that, during 2015, our
directors, executive officers and 10% stockholders complied with all applicable Section 16(a) filing requirements with the exception of one late Form 4 filing for each of Messrs. Harrington and Monto.
24
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Executive Summary
This Compensation Discussion and
Analysis provides information regarding the compensation program in place for 2015 for our Chief Executive Officer, Chief Financial Officer and Former Chief Executive Officer and the three most highly compensated executive officers other than the
aforementioned executive officers. For 2015, our named executive officers were:
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Matthew Carter, Jr., President and Chief Executive Officer;
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Kurt J. Abkemeier, Chief Financial Officer and Executive Vice President;
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John T. Bullock, Chief Technology Officer and Executive Vice President of Network Operations;
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John M. Schoder, Chief Marketing Officer and Executive Vice President;
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Brett A. Scorza, Chief Information Officer and Executive Vice President of Information Technology; Product Development; and
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G. Edward Evans, Former Chief Executive Officer.
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Effective June 22, 2015, Matthew Carter, Jr. was appointed as our President and Chief Executive Officer, replacing
our Former Chief Executive Officer, G. Edward Evans.
We provide U.S. and international voice
telecommunications services primarily on a wholesale basis. We offer these services using an all-IP network, which enables us to deliver global connectivity for a variety of media, including voice and, historically, data and video. Our solutions
enable carriers and other providers to deliver telecommunications traffic or other services where they do not have their own network or elect not to use their own network. These solutions are sometimes called off-net services. We also
provide our solutions to customers, such as over the top providers, who also typically do not have their own network. Over the past several years, we have faced increasing direct competition from other competitive providers of voice
services and indirect competition from carriers that directly connect their voice switches. The voice services we provide are highly competitive.
Our company maintains compensation plans that tie a substantial portion of executives overall compensation to our financial and operational performance, as measured by metrics such as revenue,
adjusted EBITDA and free cash flow, as more fully described herein, as well as key strategic goals such as the development of our network, the establishment and maintenance of strategic relationships and the growth of our customer base. We also base
certain of our equity grants on the total stockholder return we provide to our stockholders.
We generally
compensate our named executive officers through a mix of compensation elements, which primarily include:
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annual cash incentive bonuses;
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long-term incentive plan awards;
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change in control benefits;
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other compensation, such as travel, living and relocation expenses; and
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25
In 2015, we made substantial progress toward our Companys long-term strategic goals. Our Compensation Committee also evaluated these efforts, as well as our performance against our 2015 corporate
targets, when awarding annual cash bonuses to our executive officers.
This Compensation Discussion and
Analysis includes detailed information on how compensation decisions are made, the overall objectives of our compensation program, a description of the various components of compensation that we provide, and additional information pertinent to
understanding the compensation of our executive officers.
Compensation Philosophy and Objectives
The material principles underlying our executive compensation policies and decisions are intended to:
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implement compensation packages that are competitive with comparable organizations and allow us to attract and retain the best possible executive
talent;
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relate annual and long-term cash and stock incentives to achievement of measurable corporate and individual performance objectives;
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appropriately balance the mix of cash and non-cash short- and long-term compensation;
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encourage integrity in business dealings through the discretionary portion of our compensation package; and
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align executives incentives with long-term stockholder value creation.
|
To implement these principles, the Compensation Committee, which is responsible for approving and administering the
compensation program for executive officers and certain senior employees, including our named executive officers, expects to maintain compensation plans that tie a substantial portion of executives overall compensation to our financial and
operational performance, as measured by metrics such as revenue, adjusted EBITDA, free cash flow and total stockholder return, as more fully described below, as well as key strategic goals such as the development of our network, the establishment
and maintenance of strategic relationships and the growth of our customer base. Due to the importance of their leadership, strategic planning and policymaking roles, our executives have a large portion of their total compensation at risk
and thus subject to corporate and individual performance.
Overview of Compensation Methodology
Our Compensation Committee, both formally and informally, reviews competitive market compensation practices regularly by
engaging independent compensation consultants, speaking to recruitment agencies and reviewing publicly available information relating to compensation of executive officers at other comparable companies.
In 2013, we retained Towers Watson (known as Towers Perrin until its merger with Watson Wyatt Worldwide, Inc. in January
2010) as a compensation consultant to assist us in evaluating the compensation of our executive officers. Towers Watson used the 2013 Towers Watson Compensation Survey Reports (CSR) General Industry Top Management Survey in its evaluation of base
salaries, total cash compensation and total direct compensation, which had 480 participating organizations. For compensation planning purposes, Towers Watson recommended that the most reasonable approach was to evaluate our pay practices for our
executive officers against the survey data by size-adjusting the survey data based on revenues via a statistical regression analysis. For confidentiality purposes, Towers Watson did not disclose the specific compensation data by company
in its surveys. We believe that the aforementioned survey group was appropriate because of its significant sample size,
26
the inclusion of reasonably accurate executive position matches for benchmarking purposes and the inclusion of salary data for companies from other industries from which we might recruit future
executive officer candidates.
In 2013, we also retained Pearl Meyer to assist us in evaluating and updating
certain aspects of our equity compensation practices and conducting a competitive review of long-term equity incentive compensation for our named executive officers in order to strengthen our compensation programs and further align them with our
business strategy. Specifically, Pearl Meyer provided relevant market data and trend information, advice, alternatives and recommendations regarding the components of our equity compensation programs in an effort to better reflect and reward
corporate and individual performance.
In 2014, we again retained Pearl Meyer to assist us in evaluating and
updating certain aspects of our long-term equity incentive compensation for our named executive officers in order to further strengthen our compensation programs and align them with our business strategy. Specifically, Pearl Meyer provided updated
relevant market data and trend information, advice, alternatives and recommendations regarding the components of our equity compensation programs in an effort to better reflect and reward corporate and individual performance. In 2014, Pearl Meyer
also commenced working on changes to the design of our long-term equity incentive plan to incorporate grants of performance stock units. We made these changes in 2015.
In 2015, Pearl Meyer assisted us in further evaluating certain aspects of our long-term equity incentive compensation
programs and further align them with our business strategy. Specifically, Pearl Meyer provided advice, alternatives and recommendations regarding the components of our equity compensation programs in an effort to better reflect and reward corporate
and individual performance.
Our Compensation Committee has assessed the independence of Pearl Meyer and has
concluded that no conflict of interest exists that would prevent them from serving as independent consultants to our Compensation Committee. Our Compensation Committee considers the following factors in determining that its compensation consultants
are independent: SEC rules regarding compensation consultant independence, including the amount of fees paid by us as a percentage of the consulting firms total revenue, conflict of interest policies of the consulting firm and business or
personal relationships between the consulting firm and the members of our Compensation Committee or our executive officers. Our Compensation Committee pre-approves all other work unrelated to executive compensation proposed to be provided by such
compensation consultants.
The Compensation Committee does not seek to set executive compensation at or near
any particular percentile, although we generally believe that executive compensation should be comparable to the range for executives in similar positions at comparable companies, subject to a variety of factors. Market data is only one of the
factors the Compensation Committee considers in determining executive compensation levels. Other factors include the officers leadership and advancement of our long-term strategy, plans and objectives, individual performance and contribution
to our success and an overall assessment of our financial condition.
Further, we provide our stockholders
with the opportunity to cast an annual advisory vote to approve named executive officer compensation (a
say-on-pay
proposal). At our recent annual meetings
of stockholders, a substantial majority of the votes cast on the
say-on-pay
proposal were voted in favor of the compensation program described in the Companys
proxy statement for such annual meeting. Our Compensation Committee believes this affirms stockholders support of the Companys approach to executive compensation and, as such, has not made significant changes to its approach in recent
years and has taken additional steps to specifically reward our executive officers for their efforts in increasing relative total stockholder return and corresponding stock price improvement over the grant-date stock price. Our Compensation
Committee has also utilized the support of compensation consultants to ensure that our approach to executive compensation is regularly evaluated. Our Compensation Committee will continue to consider the outcome of the stockholders votes on
say-on-pay proposals, which will be held annually until the next stockholder advisory vote on the frequency of future votes on named executive officer compensation, when evaluating our executive compensation programs and making future compensation
decisions for our named executive officers.
27
Our Compensation Committee reviews and approves all of our compensation
policies for our named executive officers.
Elements of Compensation
The principal elements of our compensation package are as follows:
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annual cash incentive bonuses;
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|
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long-term incentive plan awards;
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change in control benefits;
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other compensation, such as travel, living and relocation expenses; and
|
Base
Salary
Base salary is used to recognize the experience, skills, knowledge and responsibilities required of
all our employees, including our named executive officers. Generally, we do not seek to set executive base salaries at or near any particular percentile, although we generally believe that base salaries should be comparable to the range of salaries
for executives in similar positions at comparable companies, subject to a variety of factors. When establishing base salaries, the Compensation Committee considers a number of factors, including the seniority of the individual, the functional role
of the position, the level of the individuals responsibility, the ability to replace the individual, the base salary of the individual at their prior employment and the number of well qualified candidates available to assume the
individuals role.
Base salaries of our named executive officers are reviewed at a minimum annually by
our Compensation Committee during our performance review, and adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance and experience. For a further description of base
salaries of our named executive officers, see Employment Agreements below.
Annual Cash Incentive Bonus
We have an annual cash incentive bonus plan for nearly all employees, including our named executive officers. The annual
cash incentive bonuses are generally intended to compensate for the achievement of our annual internal corporate financial targets, as outlined below. Amounts payable under the annual cash incentive bonus plan are calculated as a percentage of the
applicable officers base salary, with higher ranked executive officers being compensated at a higher percentage of base salary. The determination of actual bonus payments is typically based on the Companys achievement of the corporate
targets. However, our Compensation Committee retains the discretion to adjust bonus payments based on an individuals achievement of personal performance objectives. The corporate targets are the financial metrics contained in the internal
business plan adopted by our Board, including revenue targets, adjusted EBITDA targets and free cash flow targets. Adjusted EBITDA and free cash flow are non-GAAP financial measures. EBITDA is defined as net income before (a) interest expense,
net (b) income tax expense and (c) depreciation and amortization. Adjusted EBITDA is defined as EBITDA as further adjusted to eliminate
non-cash
share-based
compensation. Free cash flow is defined as adjusted EBITDA as further adjusted to eliminate capital expenditures.
Our 2015 corporate targets were revenues of $224.1 million, adjusted EBITDA of $77.9 million and free cash flow of $65.6 million; we achieved actual revenues of $248.6, million, actual adjusted EBITDA of
$77.5 million and actual free cash flow of $51.1 million.
28
Since the components of the corporate targets for 2016 contain highly
sensitive data such as targeted revenue, adjusted EBITDA and free cash flow, we do not disclose specific future measures and targets because we believe that such disclosure would result in serious competitive harm and be detrimental to our operating
performance. Achievement of the annual internal business plan financial metrics adopted by our Board will result in full credit being given for the corporate targets portion of the annual cash incentive bonus.
In addition, if we exceed annual internal corporate financial targets by a pre-determined targeted percentage, or
stretch goal, the annual cash incentive bonus for our named executive officers may be increased above the target bonus. For example, while the 2016 target bonus is set at 80% of the annual salary of our Chief Executive Officer, 60% of
the annual salary of our Chief Financial Officer and 50% of the annual salary for all other named executive officers, our Compensation Committee has established a stretch goal with specific criteria tied to exceeding the annual internal
business plan, which could result in an additional cash incentive bonus, as determined by the Compensation Committee, awarded for meeting such stretch goals. Conversely, if we fail to meet annual internal corporate financial targets by a
pre-determined targeted percentage, no bonus will be awarded.
Although the determination of actual bonus
payments is typically based solely on the Companys achievement of the corporate financial targets, our Compensation Committee retains the discretion to adjust bonus payments based on an individuals achievement of personal performance
objectives. To the extent utilized, individual objectives are necessarily tied to the particular area of expertise of the employee and their performance in attaining those objectives relative to external forces, internal resources utilized and
overall individual effort. Successful attainment of all required metrics will result in payment of the full annual cash incentive bonus, plus an additional bonus amount awarded at the discretion of the Compensation Committee if the stretch
goal criteria are met in whole or in part. Failure to meet all of the required metrics will generally result in no payment being made.
The corporate financial targets under our annual cash incentive bonus program are intended to be challenging yet achievable for the participants, but only if there is a high level of performance by our
executive officers. The targets are meant to require substantial efforts by our executive officers and their teams toward achieving our strategic goals and cost cutting measures, but at the same time they are intended to be within reach if such
significant efforts are made. In addition, achievement of stretch goal criteria will be substantially more challenging and therefore less likely to be achieved.
In 2013, the Compensation Committee determined that our named executive officers achieved more than 100% of the
Companys revenue target and more than 100% of the Companys adjusted EBITDA target, and accordingly awarded annual cash incentive bonus amounts that exceeded the targeted bonus amounts. As a result, Mr. Evans received a bonus that
was 75% of his base salary. In 2014, the Compensation Committee determined that our named executive officers achieved 104% of the Companys revenue target, 125% of the Companys adjusted EBITDA target and 131% of the Companys free
cash flow target, and accordingly awarded annual cash incentive bonus amounts that exceeded the target amounts. As a result, Mr. Evans received a bonus that was approximately 93% of his annual salary and Mr. Abkemeier received a bonus that
was approximately 62% of his annual salary. In 2015, the Compensation Committee determined that our named executive officers achieved 110.9% of the Companys revenue target, 99.5% of the Companys adjusted EBITDA target and 77.9% of the
Companys free cash flow target, and accordingly awarded annual cash incentive bonus amounts that totaled 84.5% of the target amounts.
29
Set forth below are the bonus awards for 2013, 2014 and 2015 and the
expected target bonus awards for 2016 (each as a percentage of annual base salary) for the named executive officers:
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2013 Bonus as a % of
Annual Base Salary
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2014 Bonus as a % of
Annual Base Salary
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2015 Bonus as a % of
Annual Base Salary
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2016
Target Bonus as a %
of Annual
Base Salary
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Category
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Target
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Actual
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Target
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Actual
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Target
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Actual
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Target
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Matthew Carter Jr.
(1)
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42
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%
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42
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%
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80%
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Kurt J. Abkemeier
(2)
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50
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%
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62
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%
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60
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%
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51
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%
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60%
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John T. Bullock
(3)
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40
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%
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60
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%
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40
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%
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50
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%
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50
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%
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37
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%
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50%
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John M. Schoder
(4)
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40
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%
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50
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%
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50
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%
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43
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%
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50%
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Brett A. Scorza
(5)
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40
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%
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|
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60
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%
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40
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%
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|
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50
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%
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|
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50
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%
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37
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%
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50%
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G. Edward Evans
(6)
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50
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%
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75
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%
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75
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%
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93
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%
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(1)
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Mr. Carter became our Chief Executive Officer effective June 22, 2015 and previously was not an employee of our company. For a description
of Mr. Carters employment agreement, please refer to Executive Compensation below.
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(2)
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Mr. Abkemeier became our Chief Financial Officer effective January 20, 2014 and previously was not an employee of our company. For a
description of Mr. Abkemeiers employment agreement, please refer to Executive Compensation below.
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(3)
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Mr. Bullock joined the Company September 20, 2004. In 2015, he became our Executive Vice-President, Network Operations and Chief
Technology Officer.
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(4)
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Mr. Schoder became our Senior Vice-President Voice Services effective November 19, 2013 and previously was not an employee of our company.
In 2015, Mr. Schoder became our Executive Vice-President and Chief Marketing Officer.
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(5)
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Mr. Scorza joined the Company August 16, 2004. In 2015, he became our Executive Vice-President, IT and Product Development and Chief
Information Officer.
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(6)
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On January 20, 2015, we announced that Mr. Evans would be departing as our Chief Executive Officer in connection with the expiration of
Mr. Evans employment agreement dated April 1, 2011. On March 20, 2015, Mr. Evans entered into an interim employment agreement. Mr. Evans departed as our Chief Executive Officer on June 21, 2015, so did not receive
a bonus in 2015. For a description of Mr. Evans interim employment agreement and employment agreement, please refer to Executive Compensation below.
|
The annual cash incentive bonus for the named executive officers is normally paid in a single installment in the first
quarter following the year in which the annual cash incentive bonus was earned.
Long-Term Incentive Plan Awards
We also seek to foster our long-term performance by compensating executive officers through the use of stock-based awards,
such as stock options, restricted stock awards, PSUs and other rights to receive compensation based on the value of our stock. We believe that these awards foster retention, reward employees for the growth of our Company, appropriately balance
employees incentives and are competitive with market practices. Our Compensation Committee has determined that both stock options and restricted stock awards with time-based vesting schedules is appropriate, principally because stock options
only have value if our stock price increases, while the restricted stock awards have a retention benefit regardless of stock price, and thus are important to help retain the recipient, but the overall value of the award is still based on stock
price, while the award of performance stock units aligns our executive officers with our stockholders as the awards are based on our total stockholder return. In addition, our Compensation Committee has determined that PSUs are appropriate,
principally because PSUs align our executives interests with our stockholders interests. The particular mix of the grants is determined by the Compensation Committee in its discretion after an overall assessment of all of the factors
noted above. For 2015, the annual awards, as more fully discussed below, consisted of 25% stock options, 25% restricted stock and 50% performance stock units.
30
The size of the awards is based on an assessment of our financial position
as well as individual objectives. Individual objectives are necessarily tied to the particular area of expertise of the employee and their performance in attaining those objectives relative to external forces, internal resources utilized and overall
individual effort. The individual objectives for our named executive officers in 2015 generally included the following qualitative criteria:
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Mr. Carter, President and Chief Executive Officer: the recruitment, retention and development of senior management, the strategic positioning
of our products and services and the development of new services, management of various regulatory matters and other criteria such as performance against internal corporate financial targets.
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Mr. Abkemeier, Chief Financial Officer and Executive Vice President: the management of our financial affairs, including our accounting and
budgeting functions, mergers and acquisitions activity (if any) and other criteria, such as performance against internal corporate financial targets.
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Mr. Bullock, Chief Technology Officer and Executive Vice President of Network Operations: the recruitment, retention and development of
employees in his functional areas, the operation of our telecommunications network, and establishing and delivering services to our customers.
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Mr. Schoder, Chief Marketing Officer and Executive Vice President: the recruitment, retention and development of employees in his functional
areas, the strategic positioning of our products and services and vendor cost management.
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Mr. Scorza, Chief Information Officer and Executive Vice President of Information Technology and Product Development: the recruitment,
retention and development of employees in his functional areas, the continued development of and support for our information technology systems and the development of new products and services.
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Mr. Evans departed as our Chief Executive Officer on June 21, 2015 so was not eligible to receive a bonus in 2015.
|
2015 Total Stockholder Return Performance-Based Awards
In 2015, the Compensation Committee incorporated a performance stock unit (PSU) component. The PSUs will be
measured over 18-month, two- and three-year performance periods. Each PSU represents the right to receive, if and to the extent our total stockholder return (TSR) performance targets covering the 18-month, two- and three-year performance
periods are satisfied, between zero and two shares of our common stock following completion of the performance period. At the end of the performance period, the PSUs will be distributed (to the extent earned and vested) in shares of our common stock
based upon the level of achievement of our TSR performance targets set for the performance periods as determined by the Compensation Committee. The number of shares delivered for each PSU is based on the Companys TSR weighted
(i) two-thirds against the total stockholder return of all companies in the S&P 500 Index and (ii) one-third against the total stockholder return of all companies in the S&P Small Cap 600 Telecommunications Services Index.
In 2015, we awarded the target number of PSUs in the amounts set forth in the table below.
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Number of Performance
Awards Granted at
Target #
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|
Matthew Carter, Jr.
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33,748
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(1)
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Kurt J. Abkemeier
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19,368
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(2)
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John T. Bullock
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10,006
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(3)
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John M. Schoder
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|
12,912
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(4)
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Brett A. Scorza
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|
10,006
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(5)
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G. Edward Evans
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|
(1)
|
Target PSUs for Mr. Carter of 33,748 are made up of grants for 2015, 2016 and 2017 in the amounts of 5,625, 11,249 and 16,874, respectively. On
February 8, 2016, 8,258 shares of common stock, which
|
31
|
includes accumulated dividends paid during the performance period, were delivered to Mr. Carter in connection with the completion of the 18-month performance period.
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(2)
|
Target PSUs for Mr. Abkemeier of 19,368 are made up of grants for 2015, 2016 and 2017 in the amounts of 3,228, 6,456 and 9,684, respectively.
On February 8, 2016, 4,739 shares of common stock, which includes accumulated dividends paid during the performance period, were delivered to Mr. Abkemeier in connection with the completion of the 18-month performance period.
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(3)
|
Target PSUs for Mr. Bullock of 10,006 are made up of grants for 2015, 2016 and 2017 in the amounts of 1,775, 3,228 and 5,003, respectively. On
February 8, 2016, 2,606 shares of common stock, which includes accumulated dividends paid during the performance period, were delivered to Mr. Bullock in connection with the completion of the 18-month performance period.
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(4)
|
Target PSUs for Mr. Schoder of 12,912 are made up of grants for 2015, 2016 and 2017 in the amounts of 2,260, 4,196 and 6,456, respectively. On
February 8, 2016, 3,317 shares of common stock, which includes accumulated dividends paid during the performance period, were delivered to Mr. Schoder in connection with the completion of the 18-month performance period.
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(5)
|
Target PSUs for Mr. Scorza of 10,006 are made up of grants for 2015, 2016 and 2017 in the amounts of 1,775, 3,228 and 5,003, respectively. On
February 8, 2016, 2,606 shares of common stock, which includes accumulated dividends paid during the performance period, were delivered to Mr. Scorza in connection with the completion of the 18-month performance period.
|
Mr. Evans departed as our Chief Executive Officer on June 21, 2015 so did not
receive PSUs in 2015.
We granted additional PSUs on February 22, 2016, and plan to continue to grant
performance-based
awards in succeeding fiscal years, though such awards will only consist of awards measured over a three-year performance period. We believe that the annual aggregate value of our long-term
incentive plan awards should be set near or above competitive median levels for comparable companies. Generally, we do not seek to set the annual aggregate value of our long-term incentive plan awards at or near any particular percentile, although
we generally believe that the value of such awards should be comparable to the range for executives in similar positions at comparable companies, subject to a variety of factors. Such factors include the officers leadership and advancement of
our long-term strategy, plans and objectives, individual performance and contribution to our success, budget guidelines and assessment of our financial condition.
2003 Stock Incentive Plan
On November 24, 2003,
before we were a public company, we adopted the 2003 Stock Incentive Plan to provide certain of our employees, including our executive officers, with incentives to help align those employees interests with the interests of our stockholders.
Until we became a public company, our 2003 Stock Incentive Plan was the principal method for our executive officers to acquire equity interests in us.
The Compensation Committee administers the 2003 Stock Incentive Plan and determines the type and amount of awards to be granted to eligible employees, directors and consultants based upon the principles
underlying our executive compensation program. See Overview of Compensation Methodology above. Prior to completing our initial public offering, awards were made under our 2003 Stock Incentive Plan and were generally tied to
Compensation Committee meetings. Prior to completing our initial public offering, we adopted our 2007 Equity Incentive Plan discussed below and ceased awarding equity grants under the 2003 Stock Incentive Plan. As of November 24, 2013, the
Compensation Committee may no longer make grants of options, restricted stock or other rights under the 2003 Stock Incentive Plan. As of March 23, 2016, there were 22,577 shares reserved for issuance under the 2003 Stock Incentive Plan in
respect of awards outstanding under the plan.
Amended and Restated 2007 Equity Incentive Plan
Prior to the completion of our initial public offering, we adopted the Neutral Tandem, Inc. (n/k/a Inteliquent, Inc.) 2007
Equity Incentive Plan. The 2007 Equity Incentive plan provides for grants of stock options, restricted
32
stock, restricted stock units, deferred stock units and other equity-based awards, such as performance stock units. Our directors, officers and other employees, as well as others performing
services for us, are eligible for grants under the plan. Our Compensation Committee approves all awards under the plan. Future decisions regarding the amount and type of equity incentive compensation and relative weighting of these awards among
total executive compensation will be based on our understanding of market practices of similarly situated companies and negotiations with our executives in connection with their initial or continued employment by us. Other factors, including the
amount and percentage of our total equity on a diluted basis held by our executive officers, will also be considered.
The purpose of the 2007 Equity Incentive Plan is to provide these individuals with incentives to maximize stockholder value and otherwise contribute to our success. We believe that stock options,
restricted stock awards and performance stock units granted pursuant to the 2007 Equity Incentive Plan can help to align our executives incentives with that of our stockholders and assist in the creation of long-term stockholder value while
fostering employee retention. Because our Compensation Committee has the ability to determine certain vesting criteria and, with respect to options, the exercise price, our Compensation Committee may use such equity-based awards to create an
appropriate balance of the short- and long-term non-cash compensation.
The following is a summary of the
material terms of the 2007 Equity Incentive Plan, but does not include all of the provisions of the plan.
Administration
. The Compensation Committee administers the 2007 Equity Incentive Plan. Our Board also has the
authority to administer the plan and to take all actions that the Compensation Committee is otherwise authorized to take under the plan.
Available Shares
. As of March 23, 2016, there were awards for 1,744,845 shares issued and outstanding under the 2007 Equity Incentive Plan, and 2,250,712 shares, representing approximately
6.6% of our outstanding common stock, available for issuance under the 2007 Equity Incentive Plan. The number of shares available for issuance under the 2007 Equity Incentive Plan is subject to adjustment in the event of a reorganization, stock
split, merger or similar change in our corporate structure or the outstanding shares of common stock. In the event of any of these occurrences, we may make any adjustments we consider appropriate to, among other things, the number and kind of
shares, options or other property available for issuance under the plan or covered by grants previously made under the plan. The shares available for issuance under the plan may be, in whole or in part, authorized and unissued or held as treasury
shares.
Eligibility
. Our directors, officers and employees, as well as other individuals performing
services for us, are eligible to receive grants under the 2007 Equity Incentive Plan. However, only employees may receive grants of incentive stock options. In each case, the Compensation Committee will select the actual grantees.
Stock Options
. Under the 2007 Equity Incentive Plan, the Compensation Committee or the Board may award grants of
incentive stock options conforming to the provisions of Section 422 of the Internal Revenue Code, and other, non-qualified stock options. The Compensation Committee may not, however, award to any one person in any calendar year options to
purchase common stock equal to more than 25.0% of the total number of shares authorized under the plan and, if required by the Internal Revenue Code, it may not award incentive options first exercisable in any calendar year whose underlying shares
have a fair market value greater than $100,000, determined at the time of grant.
The exercise price of an
option granted under the plan may not be less than 100% of the fair market value of a share of common stock on the date of grant, and the exercise price of an incentive option awarded to a person who owns stock constituting more than 10% of our
voting power may not be less than 110% of such fair market value on such date.
33
Unless the Compensation Committee determines otherwise, the exercise price
of any option may be paid in any of the following ways:
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|
|
by delivery of shares of common stock with a fair market value equal to the exercise price; and/or
|
|
|
|
by simultaneous sale through a broker of shares of common stock acquired upon exercise.
|
If a participant elects to deliver shares of common stock in payment of any part of an options exercise price, the
Compensation Committee may in its discretion grant the participant a reload option. The reload option entitles its holder to purchase a number of shares of common stock equal to the number so delivered. The reload option may also
include, if the Compensation Committee chooses, the right to purchase a number of shares of common stock equal to the number delivered or withheld in satisfaction of any of our withholding requirements in connection with the exercise of the original
option. The terms of each reload option will be the same as those of the original exercised option, except that the grant date will be the date of exercise of the original option, and the exercise price will be the fair market value of the common
stock on the date of exercise.
The Compensation Committee will determine the term of each option in its
discretion. However, the terms of option awards under the 2007 Equity Incentive Plan are generally ten years and no term may exceed ten years from the date of grant or, in the case of an incentive option granted to a person who owns stock
constituting more than 10% of the voting power of us, five years from the date of grant. In addition, all options under the 2007 Equity Incentive Plan, whether or not then exercisable, generally cease vesting when a grantee ceases to be a director,
officer or employee of, or to otherwise perform services for, us or our subsidiaries.
For example, options
generally expire 90 days after the date of cessation of service, so long as the grantee does not compete with us during the 90-day period. In the case of a participants retirement, all options that are exercisable shall remain so for up to 90
days after the date of retirement, and all options that were not exercisable will terminate upon the date of retirement. However, in the case of a participants death or disability, all options will become fully vested and exercisable and
remain so for up to 90 days after the date of death or disability. In each of the foregoing circumstances, the Board or the Compensation Committee may elect to accelerate the vesting of unvested options and further extend the applicable exercise
period in its discretion. Upon termination for cause, all options will terminate immediately. If we undergo a change in control and a grantee is terminated from service (other than for cause) within one year thereafter, all options will become fully
vested and exercisable and remain so for up to one year after the date of termination. In addition, the Compensation Committee has granted certain equity awards that vest upon a change in control of us, whether or not the grantee is subsequently
terminated. In 2015, we granted option awards in the amounts set forth in the table below.
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Name
|
|
Number of
Securities
Underlying
Options
(#)
|
|
|
Exercise Price
($)
|
|
Matthew Carter Jr.
|
|
|
46,467
|
(1)
|
|
|
18.52
|
|
Kurt J. Abkemeier
|
|
|
13,847
|
(2)
|
|
|
15.49
|
|
John T. Bullock
|
|
|
7,154
|
(2)
|
|
|
15.49
|
|
John M. Schoder
|
|
|
9,231
|
(2)
|
|
|
15.49
|
|
Brett A. Scorza
|
|
|
7,154
|
(2)
|
|
|
15.49
|
|
G. Edward Evans
|
|
|
|
|
|
|
|
|
(1)
|
One-quarter of these options will vest on June 22, 2016 (the first anniversary date of the grants) with the remaining three-quarters of the
options vesting in equal annual installments on the subsequent three anniversary dates of the grants.
|
(2)
|
One-quarter of these options vested on March 13, 2016 (the first anniversary date of the grants) with the remaining three-quarters of the
options vesting in equal annual installments on the subsequent three anniversary dates of the grants.
|
34
Mr. Evans departed as our Chief Executive Officer on June 21,
2015so did not receive options in 2015.
Restricted Stock
. Under the 2007 Equity Incentive Plan, the
Compensation Committee may award restricted stock subject to the conditions and restrictions, and for the duration, which will generally be at least six months, that it determines in its discretion. If a participant ceases to be a director, officer
or employee of, or to otherwise perform services for, us or our subsidiaries during any period of restriction, all shares of restricted stock on which the restrictions have not lapsed shall be immediately forfeited to us. If, however, the cessation
occurs due to death, disability or retirement, all restrictions on shares of restricted stock granted to such participant shall lapse. If we undergo a change in control and a participant is terminated (other than for cause) from being a director,
officer or employee of, or otherwise performing services for, us or our subsidiaries within one year after such change in control, all restrictions on shares of restricted stock granted to such participant shall lapse. In addition, the Compensation
Committee has the authority to award shares of restricted stock with respect to which all restrictions shall lapse automatically upon a change in control of us, whether or not the participant is subsequently terminated.
In 2015, we granted restricted stock awards to our named executive officers in the amounts set forth in the table below.
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|
|
|
|
|
|
Name
|
|
Number of Shares
Awarded
(#)
|
|
|
Date of Award
|
Matthew Carter Jr.
|
|
|
16,874
|
(1)
|
|
June 22, 2015
|
Kurt J. Abkemeier
|
|
|
5,411
|
(2)
|
|
February 23, 2015
|
|
|
|
1,804
|
(3)
|
|
March 3, 2015
|
|
|
|
4,842
|
(4)
|
|
March 13, 2015
|
John T. Bullock
|
|
|
2,814
|
(2)
|
|
February 23, 2015
|
|
|
|
2,502
|
(4)
|
|
March 13, 2015
|
John M. Schoder
|
|
|
30,000
|
(5)
|
|
January 30, 2015
|
|
|
|
2,886
|
(2)
|
|
February 23, 2015
|
|
|
|
3,228
|
(4)
|
|
March 13, 2015
|
Brett A. Scorza
|
|
|
2,814
|
(2)
|
|
February 23, 2015
|
|
|
|
2,502
|
(4)
|
|
March 13, 2015
|
G. Edwards Evans
|
|
|
14,610
|
(2)
|
|
February 23, 2015
|
(1)
|
One-quarter of these shares will vest on June 22, 2016 (the first anniversary date of the grants) with the remaining three-quarters of the
shares vesting in equal annual installments on the subsequent three anniversary dates of the grants.
|
(2)
|
These shares vested immediately upon grant date on February 23, 2015.
|
(3)
|
These shares vested immediately upon grant date on March 3, 2015.
|
(4)
|
One-quarter of these shares vested on March 13, 2016 (the first anniversary date of the grants) with the remaining three-quarters of the shares
vesting in equal annual installments on the subsequent three anniversary dates of the grants.
|
(5)
|
One-quarter of these shares vested on January 30, 2016 (the first anniversary date of the grants) with the remaining three-quarters of the
shares vesting in equal annual installments on the subsequent three anniversary dates of the grants.
|
Restricted Stock Units; Deferred Stock Units
. Under the 2007 Equity Incentive Plan, the Compensation Committee may award restricted stock units subject to the conditions and restrictions, and for
the duration, which will generally be at least six months, that it determines in its discretion. Each restricted stock unit is equivalent in value to one share of common stock and entitles the grantee to receive one share of common stock for each
restricted stock unit at the end of the vesting period applicable to such restricted stock unit. If a participant ceases to be a director, officer or employee of, or to otherwise perform services for us or our affiliates during any period of
restriction, all restricted stock units on which the restrictions have not lapsed shall be immediately forfeited to us. If, however, the cessation occurs due to death, disability or retirement, all restrictions on restricted stock units
35
granted to such participant shall lapse. If we undergo a change in control and a participant is terminated (other than for cause) from being a director, officer or employee of, or otherwise
performing services for, us or our subsidiaries within one year after such change in control, all restrictions on restricted stock units granted to such participant shall lapse. In addition, the Compensation Committee has the authority to award
restricted stock units with respect to which all restrictions shall lapse automatically upon a change in control of us, whether or not the participant is subsequently terminated. Prior to the later of (i) the close of the tax year preceding the
year in which restricted stock units are granted or (ii) 30 days of first becoming eligible to participate in the plan (or, if earlier, the last day of the tax year in which the participant first becomes eligible to participate in the plan) and
on or prior to the date the restricted stock units are granted, a grantee may elect to defer the receipt of all or a portion of the shares due with respect to the restricted stock units and convert such restricted stock units into deferred stock
units. Subject to specified exceptions, the grantee will receive shares in respect of such deferred stock units at the end of the deferral period.
Performance Awards
. Under the 2007 Equity Incentive Plan, the Compensation Committee may grant performance awards contingent upon achievement by the grantee, us and/or our subsidiaries or divisions
of set goals and objectives regarding specified performance criteria, such as, for example, return on equity, over a specified performance cycle, as designated by the Compensation Committee. Performance awards may include specific dollar-value
target awards, performance units, the value of which is established by the Compensation Committee at the time of grant, and/or performance shares. The value of a performance award may be fixed or fluctuate on the basis of specified performance
criteria. A performance award may be paid out in cash and/or shares of our common stock or other securities.
Unless the Compensation Committee determines otherwise, if a grantee ceases to be a director, officer or employee of, or
to otherwise perform services for, us or our subsidiaries prior to completion of a performance cycle due to death, disability or retirement, the grantee will receive the portion of the performance award payable to him or her based on achievement of
the applicable performance criteria over the elapsed portion of the performance cycle. Except as otherwise determined by the Compensation Committee with respect to cash awards, if termination of employment or service occurs for any other reason
prior to completion of a performance cycle, the grantee will become ineligible to receive any portion of a performance award. If we undergo a change in control, a grantee will earn no less than the portion of the performance award that he or she
would have earned if the applicable performance cycle had terminated as of the date of the change in control.
Vesting, Withholding Taxes and Transferability of All Awards
. The terms and conditions of each award made under
the 2007 Equity Incentive Plan, including vesting requirements, will be set forth in a written agreement with the grantee. Except in limited circumstances, no award under the 2007 Equity Incentive Plan may vest and become exercisable within six
months of the date of grant, unless the Compensation Committee determines otherwise.
Unless the Compensation
Committee determines otherwise, a participant may elect to deliver shares of common stock, or to have us withhold shares of common stock otherwise issuable upon exercise of an option or upon grant or vesting of restricted stock or a restricted stock
unit, in order to satisfy our withholding obligations in connection with any such exercise, grant or vesting.
Unless the Compensation Committee determines otherwise, no award made under the 2007 Equity Incentive Plan will be
transferable other than by will or the laws of descent and distribution or to a grantees family member by gift or a qualified domestic relations order, and each award may be exercised only by the grantee, his or her qualified family member
transferee, or any of their respective executors, administrators, guardians, or legal representatives. We do not have a policy to recover awards if relevant performance measures upon which they were based are restated or otherwise adjusted in a
manner that would reduce the size of a payment.
Amendment and Termination of the 2007 Equity Incentive
Plan
. The Board may amend or terminate the 2007 Equity Incentive Plan in its discretion, except that no amendment will become effective without prior approval of our stockholders if such approval is necessary for continued compliance with NASDAQ
listing
36
requirements. Furthermore, any termination may not materially and adversely affect any outstanding rights or obligations under the 2007 Equity Incentive Plan without the affected
participants consent. If not previously terminated by the Board, the 2007 Equity Incentive Plan will terminate on October 31, 2017.
Severance Benefits
Our named executive officers and certain other executives with employment agreements are covered by arrangements which specify payments in the event the executives employment is terminated. The type
and amount of payments vary by executive level and the nature of the termination. These severance benefits are payable if and only if the executives employment terminates as specified in the applicable employment agreement. Our primary reason
for including severance benefits in compensation packages is to attract and retain the best possible executive talent. We believe our severance benefits are competitive with general industry packages. For a further description of these severance
benefits, see Employment Agreements below.
Change in Control Benefits
Members of our Board, our named executive officers, and certain other members of our senior management are covered by
arrangements, including but not limited to employment agreements, which specify accelerated vesting of unvested stock options, restricted stock and performance stock units in the event of a change in control. The Boards stock
options and restricted stock awards fully vest upon a change of control, and certain executives stock options and restricted stock partially vest upon a change of control and fully vest if, within a period of time of the change of control,
they are not retained in their current capacity. In addition, the Compensation Committee has granted certain equity awards that vest upon a change in control, whether or not the grantee is subsequently terminated. Our primary reason for
including change in control benefits in compensation packages is to attract and retain the best possible executive talent. We believe our change in control benefits are competitive with general industry practices.
In addition, our 2003 Stock Incentive Plan provides that in the event of our change in control, the
Compensation Committee may otherwise determine the status of unvested options or restricted stock, including, without limitation, whether the successor corporation will assume or substitute an equivalent award, or portion thereof, for each
outstanding award under the plan or, if there is no assumption or substitution of unvested outstanding awards, such unvested awards may be canceled.
For a further description of the employment agreements with our named executive officers, see Employment Agreements below. For additional information concerning severance and change in
control benefits, see Potential Payments upon Termination or Change in Control below.
Other Compensation
In 2013, none of our named executive officers (other than Mr. Evans) received a material amount of travel, living and
relocation expenses or other similar compensation, however, we intend to continue to maintain executive benefits for officers, and, the Compensation Committee may in its discretion revise, amend or increase named executive officers benefits as
it deems advisable. We believe these benefits are currently not above median competitive levels for comparable companies and are beneficial in attracting and retaining executive talent.
In 2014, we appointed Mr. Abkemeier as our Chief Financial Officer and Executive Vice President. Under the terms of
Mr. Abkemeiers employment agreement, we agreed to reimburse Mr. Abkemeiers reasonable expenses for his move to Chicago, Illinois, the cost of one round trip single passenger airline ticket (by economy class) per week between
Chicago, Illinois and Atlanta, Georgia, and the cost of a corporate apartment prior to his relocation to Chicago, Illinois, up to a maximum aggregate amount of $100,000. In addition, we agreed to pay the realtors commission associated with the
sale of Mr. Abkemeiers home in Atlanta, Georgia, up to the lesser
37
of 6% of the homes sale price or $100,000. Mr. Abkemeier is no longer entitled to receive any amounts related to either the cost of a corporate apartment or realtors commission
associated with the sale of Mr. Abkemeiers home in Atlanta, Georgia.
In 2015, we appointed Matthew
Carter, Jr. as our President and Chief Executive Officer. Under the terms of Mr. Carters employment agreement, we agreed to reimburse Mr. Carters for his reasonable commuting expenses between San Diego, California and Chicago,
Illinois, including the cost of one round trip single passenger airline ticket (by economy class) per week and the cost of a corporate apartment prior to his relocation to Chicago, Illinois, up to a maximum aggregate amount of $100,000. Further, to
the extent that any such relocation amounts are not used, we agreed that such amounts would be applied against Mr. Carters costs and expenses related to his relocation to Chicago, Illinois. Mr. Carter has received payment of the
amount referenced above in full. In addition, under the terms of Mr. Carters employment agreement, we agreed to reimburse Mr. Carters reasonable and customary relocation expenses related to his move to Chicago, Illinois,
including real estate brokerage commissions and customary closing costs, up to a maximum aggregate amount of $150,000. We continue to pay Mr. Carter for his reasonable and customary relocation expenses related to his relocation to Chicago,
Illinois, up to the maximum aggregate amount referenced above.
Under the terms of Mr. Evans
interim employment agreement, in 2015, we provided Mr. Evans with lodging near our principal offices in Chicago, Illinois. We also provided Mr. Evans with one round trip single passenger airline ticket (by economy class) per week between
Chicago, Illinois and Oklahoma City, Oklahoma.
For a description of the employment agreements with our named
executive officers, see Employment Agreements below.
401(k) Plan
We maintain a tax-qualified retirement plan that provides eligible employees with an opportunity to save for retirement on
a tax-advantaged basis. Eligible employees are able to participate in the 401(k) plan on the first day of the month following the employees respective start date. We match 100% of the first 4% of income for employees who participate. Pre-tax
contributions are allocated to each participants individual account and are then invested in selected investment alternatives, other than our common stock, according to the participants directions. All employee contributions are 100%
vested. The 401(k) plan is intended to qualify under Sections 401(a) and 501(a) of the Internal Revenue Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees
until distributed from the 401(k) plan. We believe that offering a 401(k) retirement plan increases our ability to attract and retain the best possible talent.
Differences in Compensation
Between our named executive
officers there are variances in both the amount and the mix of compensation. Generally, the differences reflect the level of responsibility and the experience of the named executive officer. Among our named executive officers, the compensation
differences in 2015 largely reflect the differences in overall responsibility, with Mr. Carter, our Chief Executive Officer, paid at the highest pay scale reflective of his greater responsibility.
Role of Executive Officers in Executive Compensation
The Compensation Committee determines the compensation payable to each of the named executive officers as well as the compensation of the members of the Board. The Compensation Committee determines the
compensation paid to each of our named executive officers based upon various factors and sources of information, including recommendations of management. See Overview of Compensation Methodology and
38
Elements of Compensation above. No member of our management, including our named executive officers, provides recommendations to the Compensation Committee with respect to his
or her own compensation.
Employment Agreements
We have entered into an employment agreement with each of our named executive officers. Each employment agreement provides
for an annual salary and a discretionary annual incentive cash bonus and/or equity awards up to 80% for our chief executive officer, 60% for our Chief Financial Officer and 50% in the case of all of our other named executive officers annual
salary or such greater amount as our Board may determine. Each of the agreements provides for a severance payment over a prescribed term in the event the named executive is terminated without cause, including if his duties are materially changed in
connection with a change of control. Each agreement also provides that no severance payment is due in the event of termination with cause, which includes termination for willful misconduct, conviction of a felony, dishonesty or fraud. Each agreement
further contains an agreement by the named executive officer not to compete with us for a defined term equal in length to the applicable severance payment in the respective employment agreement, which we feel is reasonable and consistent with
industry guidelines.
Matthew Carter, Jr
. We entered into an employment agreement with Mr. Carter,
effective June 22, 2015, under which Mr. Carter agreed to serve as our President and Chief Executive Officer for a term of three years, which term renews automatically for one-year terms unless we or Mr. Carter provide prior notice of
termination. Pursuant to the terms of his employment agreement, Mr. Carters annual salary is $500,000. In the event Mr. Carters employment is terminated by us without case or by Mr. Carter for good reason or any reason
following the Companys delivery of a notice of non-renewal of the agreement, we are obligated to pay to Mr. Carter any unpaid base salary through the date of termination, any accrued vacation pay and severance equal to twelve months
base salary at the salary rate in effect on the date of termination. If, within twelve months following or one month prior to a change of control, Mr. Carters employment is terminated by the Company without cause, or terminated by
Mr. Carter for good reason or for any reason following the Companys delivery of a notice of non-renewal of the agreement, the Company will be obligated to pay Mr. Carter any unpaid base salary through the date of termination, any
accrued vacation pay and severance equal to twenty-four months base salary at the salary rate in effect on the date of termination. In either case, the Company will provide Mr. Carter with senior executive level career transition services
for a period of twelve months up to a maximum cost of $50,000. In the event Mr. Carter dies, becomes disabled or his employment terminates for any other reason, the Company will be obligated to pay Mr. Carter (or his legal representative)
any unpaid base salary through the date of termination, any unused vacation pay accrued through the date of termination, any unreimbursed expenses and an amount equal to a prorated portion of Mr. Carters target bonus for the year in which
the termination occurs. During the employment period and through the first anniversary of the date of Mr. Carters termination, Mr. Carter will be prohibited from directly or indirectly competing with the Company. We also agreed to
reimburse Mr. Carters for his reasonable commuting expenses between San Diego, California and Chicago, Illinois, including the cost of one round trip single passenger airline ticket (by economy class) per week and the cost of a corporate
apartment prior to his relocation to Chicago, Illinois, up to a maximum aggregate amount of $100,000. Further, to the extent that any such relocation amounts are not used, we agreed that such amounts would be applied against Mr. Carters
costs and expenses related to his relocation to Chicago, Illinois. Mr. Carter has received payment of the amount referenced above in full. In addition, we agreed to reimburse Mr. Carters reasonable and customary relocation expenses
related to his move to Chicago, Illinois, including brokerage commissions and customary real estate closing costs, up to a maximum aggregate amount of $150,000. We continue to pay Mr. Carter for his reasonable and customary relocation expenses
related to his relocation to Chicago, Illinois, up to the maximum aggregate amount referenced above.
Kurt
J. Abkemeier
. We entered into an employment agreement with Mr. Abkemeier, effective January 20, 2014, under which Mr. Abkemeier agreed to serve as our Chief Financial Officer and Executive Vice President for a term of three years,
which term renews automatically for one-year terms unless we or Mr. Abkemeier provide prior notice of termination. Pursuant to the terms of his employment agreement, Mr. Abkemeiers annual
39
salary is $320,000, and effective January 1, 2015, Mr. Abkemeiers salary was increased to $330,000. In the event Mr. Abkemeiers employment is terminated by us without
cause or by Mr. Abkemeier for good reason or for any reason following the Companys delivery of a notice of non-renewal of the agreement, we are obligated to pay to Mr. Abkemeier any unpaid base salary through the date of termination,
any accrued vacation pay and severance equal to one years base salary at the salary rate in effect on the date of termination. If, within twelve months following a change of control, Mr. Abkemeiers employment is terminated by us
without cause, or terminated by Mr. Abkemeier for good reason or for any reason following the Companys delivery of a notice of
non-renewal
of the agreement, we are obligated to pay to
Mr. Abkemeier any unpaid base salary through the date of termination, any accrued vacation pay and severance equal to two years base salary. In the event Mr. Abkemeier dies, becomes disabled or his employment terminates for any other
reason, we are obligated to pay Mr. Abkemeier any unpaid base salary through the date of termination, any unused vacation accrued through the date of termination and any unreimbursed business expenses. During the employment period and through
the first anniversary of the date of Mr. Abkemeiers termination, Mr. Abkemeier is prohibited from directly or indirectly competing with us. We also agreed to reimburse Mr. Abkemeiers reasonable expenses for his move to
Chicago, Illinois, the cost of one round trip single passenger airline ticket (by economy class) per week between Chicago, Illinois and Atlanta, Georgia, and the cost of a corporate apartment prior to his relocation to Chicago, Illinois, up to a
maximum aggregate amount of $100,000. In addition, we agreed to pay the realtors commission associated with the sale of Mr. Abkemeiers home in Atlanta, Georgia, up to the lesser of 6% of the homes sale price or $100,000.
Mr. Abkemeier is no longer entitled to receive any amounts related to either the cost of a corporate apartment or realtors commission associated with the sale of Mr. Abkemeiers home in Atlanta, Georgia.
John T. Bullock
. We entered into an employment agreement with Mr. Bullock, effective September 2, 2008,
under which Mr. Bullock agreed to serve as SVP, Network Engineering and Operations (Mr. Bullock has since been promoted to Chief Technology Officer and Executive Vice President of Network Operations) for a term initially set to expire on
February 5, 2010, which renews automatically for
one-year
terms unless we or Mr. Bullock provide prior notice of termination. As of January 1, 2016, Mr. Bullocks annual salary was
$255,233. Effective November 1, 2015, Mr. Bullocks annual salary was increased to $270,000. If Mr. Bullocks employment is terminated by us without cause, or terminated by Mr. Bullock for good reason or for any reason
following the Companys delivery of a notice of non-renewal of the agreement, we are obligated to pay to Mr. Bullock any unpaid base salary through the date of termination, any accrued vacation pay and severance equal to twelve
months base salary at the salary rate in effect on the date of termination. If, within twelve months following a change of control, Mr. Bullocks employment is terminated by us without cause, or terminated by Mr. Bullock for
good reason or for any reason following the Companys delivery of a notice of non-renewal of the agreement, we are obligated to pay to Mr. Bullock any unpaid base salary through the date of termination, any accrued vacation pay and
severance equal to twenty-four months base salary at the salary rate in effect on the date of termination. In the event Mr. Bullock dies, becomes disabled or his employment terminates for any other reason, we are obligated to pay
Mr. Bullock any unpaid base salary through the date of termination, any unused vacation accrued through the date of termination and any unreimbursed business expenses. During the employment period and through the first anniversary of the date
of Mr. Bullocks termination, Mr. Bullock is prohibited from directly or indirectly competing with us.
John M. Schoder
. We entered into an employment agreement with Mr. Schoder, effective January 30, 2015, under which Mr. Schoder agreed to serve as Executive Vice President, Sales,
Product and Marketing (Mr. Schoder has since been promoted to Chief Marketing Officer and Executive Vice President) for a term of two years, which renews automatically for
one-year
terms unless we or
Mr. Schoder provide prior notice of termination. Pursuant to the terms of his employment agreement, Mr. Schoders annual salary is $270,000. If Mr. Schoders employment is terminated by us without cause, or terminated by
Mr. Schoder for good reason or for any reason following the Companys delivery of a notice of non-renewal of the agreement, we are obligated to pay to Mr. Schoder any unpaid base salary through the date of termination, any accrued
vacation pay and severance equal to twelve months base salary at the salary rate in effect on the date of termination. If, within twelve months following a change of control, Mr. Schoders employment is terminated by us without
cause, or
40
terminated by Mr. Schoder for good reason or for any reason following the Companys delivery of a notice of non-renewal of the agreement, we are obligated to pay to Mr. Schoder any
unpaid base salary through the date of termination, any accrued vacation pay and severance equal to twenty-four months base salary at the salary rate in effect on the date of termination. In the event Mr. Schoder dies, becomes disabled or
his employment terminates for any other reason, we are obligated to pay Mr. Schoder any unpaid base salary through the date of termination, any unused vacation accrued through the date of termination and any unreimbursed business expenses.
During the employment period and through the first anniversary of the date of Mr. Schoders termination, Mr. Schoder is prohibited from directly or indirectly competing with us.
Brett A. Scorza
. We entered into an employment agreement with Mr. Scorza, effective November 3, 2006,
under which Mr. Scorza agreed to serve as Vice President of Information Systems (Mr. Scorza has since been promoted to Chief Information Officer and Executive Vice President of Information Technology and Product Development) for a term of four
years, which renews automatically for
one-year
terms unless we or Mr. Scorza provide prior notice of termination. As of January 1, 2016, Mr. Scorzas annual salary was $255,481. Effective
November 1, 2015, Mr. Scorzas annual salary was increased to $270,000. If Mr. Scorzas employment is terminated by us without cause, or terminated by Mr. Scorza for good reason or for any reason following the
Companys delivery of a notice of non-renewal of the agreement, we are obligated to pay to Mr. Scorza any unpaid base salary through the date of termination, any accrued vacation pay and severance equal to twelve months base salary
at the salary rate in effect on the date of termination. If, within twelve months following a change of control, Mr. Sccorzas employment is terminated by us without cause, or terminated by Mr. Scorza for good reason or for any reason
following the Companys delivery of a notice of non-renewal of the agreement, we are obligated to pay to Mr. Scorza any unpaid base salary through the date of termination, any accrued vacation pay and severance equal to twenty-four
months base salary at the salary rate in effect on the date of termination. In the event Mr. Scorza dies, becomes disabled or his employment terminates for any other reason, we are obligated to pay Mr. Scorza any unpaid base salary
through the date of termination, any unused vacation accrued through the date of termination and any unreimbursed business expenses. During the employment period and through the first anniversary of the date of Mr. Scorzas termination,
Mr. Scorza is prohibited from directly or indirectly competing with us.
G. Edward Evans
. We
entered into an employment agreement with Mr. Evans, effective April 1, 2011, under which Mr. Evans agreed to serve as our Chief Executive Officer for a term of four years. Pursuant to the terms of his employment agreement,
Mr. Evans annual salary was initially $495,000 and, effective January 1, 2014, Mr. Evans annual salary was increased to $514,800. The Company agreed to provide Mr. Evans with a furnished corporate apartment within
reasonable commuting distance of the Companys principal offices in Chicago, Illinois. The Company also agreed to provide Mr. Evans with one round trip single passenger airline ticket (by economy class) per week between Chicago, Illinois
and Oklahoma City, Oklahoma. During the employment period and through the first anniversary of the date of Mr. Evans termination, Mr. Evans was prohibited from directly or indirectly competing with us.
On January 20, 2015, we announced that Mr. Evans would be departing as our Chief Executive Officer in
connection with the upcoming expiration of his employment agreement. On March 20, 2015, Mr. Evans entered into an interim employment agreement effective as of April 1, 2015. Under the interim employment agreement, Mr. Evans
continued to serve as our Chief Executive Officer on an interim basis during a term that commenced on April 1, 2015 and expired on June 2, 2015 (the Interim Employment Period). The interim employment agreement provided for an
annual salary of $1,029,600 and no discretionary annual incentive cash bonus. The Company continued to reimburse Mr. Evans for reasonable costs incurred in connection with Mr. Evans travel between Oklahoma City, Oklahoma and Chicago,
Illinois during the Interim Employment Period, including reasonable travel, lodging and meal expenses. Upon the termination of the Interim Employment Period, the Company was obligated to pay to Mr. Evans any unpaid base salary through the date
of termination, any accrued vacation pay and severance equal to twelve months base salary at the annual salary rate of $514,800. In addition, upon the termination of the Interim Employment Period, any unvested equity awards received by
Mr. Evans that would have vested within eighteen (18) months of the termination date of the interim employment agreement
41
became immediately vested on the day after such termination date. Any stock option awards that became vested pursuant to the interim employment agreement expired on December 22, 2015. The
foregoing severance obligations were subject to Mr. Evans executing a general release in favor of the Company. In addition, through June 21, 2016, Mr. Evans will be prohibited from directly or indirectly competing with the Company.
Compensation Mix
The Compensation Committee carefully determines the mix of compensation, both among short- and long-term compensation and cash and non-cash compensation, to determine compensation structures that we
believe are appropriate for each of our named executive officers. In making compensation decisions, the Compensation Committee evaluates how its compensation structures create incentives that affect risk taking and whether such compensation
structures properly align the interests of each of our named executive officers with our long-term interests and the interests of our stockholders. We use short-term compensation (base salaries and annual cash bonuses) and long-term compensation
(options and restricted stock awards) to encourage long-term growth in stockholder value and further our additional objectives discussed above. See Overview of Compensation Methodology above. The mix of cash and non-cash
compensation may sometimes be adjusted to reflect an individuals need for current cash compensation. In the past, base salary typically has constituted a minority position of the total compensation of our named executive officers. We set some
salary to provide adequate compensation to support a reasonable standard of living, so that our named executive officers are prepared to have at risk compensation awarded under our 2003 Stock Incentive Plan and 2007 Equity Incentive
Plan. The summary compensation table below illustrates the long and short-term and cash and non-cash components of compensation.
Stock
Ownership Guidelines; Anti-Hedging Policy
Our Board has adopted stock ownership guidelines for members of
our senior management team and our directors. Under these guidelines, senior executive officers and directors would be expected to hold an ownership stake in our equity that would be a specified multiple of each persons respective annual base
salary or cash compensation as follows:
|
|
|
Title/Position
|
|
Multiple of Annual Base
Salary/Cash
Compensation
|
Chief Executive Officer
|
|
Three times annual salary
|
Chief Financial Officer
|
|
Two times annual salary
|
Other Named Executive Officers and
Non-Employee Directors
|
|
One and one-half times annual
salary / cash retainer
|
Each individual is allowed three years to become compliant with any approved guidelines,
and all individuals are currently compliant with the above-referenced guidelines. Our policy is designed to align our senior executive officers and directors ownership stakes in the Company with the interests of our stockholders.
We have a policy which requires that our directors and executive officers do not participate in hedging
transactions such as short-swing trading, short selling or entering into any derivative securities related to their ownership of our common stock.
Accounting and Tax Considerations
The Compensation
Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, which provides that we may not deduct certain compensation of more than $1 million that is paid to certain
individuals. No assurance can be provided that any portion of our executive compensation is deductible in accordance with Section 162(m) of the Internal Revenue Code. The Compensation Committee also reviews and considers the potential expense
of each element of executive compensation under accounting principles generally accepted in the United States and their impact on earnings per share.
42
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by
Item 402(b) of Regulation S-K with management, and based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in our this proxy statement.
The Compensation Committee
Timothy A. Samples, Chairman
Edward M. Greenberg
Lauren F. Wright
43
Summary Compensation Table
The following Summary Compensation Table sets forth the information concerning the 2015, 2014 and 2013 compensation of
our CEO, CFO and other named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
Year
|
|
|
Salary
(1)
($)
|
|
|
Bonus
(2)
($)
|
|
|
Stock
Awards
(3)
($)
|
|
|
Option
Awards
(4)
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Changes in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
(5)(6)(7)(8)
($)
|
|
|
Total
($)
|
|
Matthew Carter Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
2015
|
|
|
$
|
259,615
|
|
|
$
|
210,411
|
|
|
$
|
1,188,805
|
|
|
$
|
312,500
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
83,774
|
|
|
$
|
2,055,105
|
|
|
|
|
|
|
|
|
|
|
|
Kurt J. Abkemeier
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer and Executive Vice President
|
|
|
2015
|
|
|
$
|
330,000
|
|
|
$
|
167,904
|
|
|
$
|
610,682
|
|
|
$
|
75,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
56,732
|
|
|
$
|
1,240,318
|
|
|
|
|
2014
|
|
|
$
|
320,000
|
|
|
$
|
198,272
|
|
|
$
|
633,600
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
55,591
|
|
|
$
|
1,207,463
|
|
|
|
|
|
|
|
|
|
|
|
John T. Bullock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Technology Officer and Executive Vice President of Network Operations
|
|
|
2015
|
|
|
$
|
257,500
|
|
|
$
|
95,348
|
|
|
$
|
301,643
|
|
|
$
|
38,750
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
8,415
|
|
|
$
|
701,656
|
|
|
|
|
|
|
|
|
|
|
|
John M. Schoder
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Marketing Officer and Executive Vice President
|
|
|
2015
|
|
|
$
|
267,500
|
|
|
$
|
114,480
|
|
|
$
|
880,606
|
|
|
$
|
50,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
27,036
|
|
|
$
|
1,339,622
|
|
|
|
|
|
|
|
|
|
|
|
Brett A. Scorza
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Information Officer and Executive Vice President of Information of Technology and Product Development
|
|
|
2015
|
|
|
$
|
257,500
|
|
|
$
|
95,348
|
|
|
$
|
301,643
|
|
|
$
|
38,750
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
5,176
|
|
|
$
|
698,417
|
|
|
|
|
|
|
|
|
|
|
|
G. Edward Evans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Chief Executive Officer
|
|
|
2015
|
|
|
$
|
425,700
|
|
|
$
|
|
|
|
$
|
259,474
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
260,478
|
|
|
$
|
945,652
|
|
|
|
|
2014
|
|
|
$
|
514,800
|
|
|
$
|
478,455
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
72,566
|
|
|
$
|
1,065,821
|
|
|
|
|
2013
|
|
|
$
|
495,000
|
|
|
$
|
371,200
|
|
|
$
|
111,400
|
|
|
$
|
456,671
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
74,178
|
|
|
$
|
1,508,449
|
|
(1)
|
Represents the dollar value of the base salary earned during 2015, 2014 and 2013, respectively.
|
(2)
|
Represents the dollar value of the bonus earned during 2015, 2014 and 2013, respectively.
|
(3)
|
Represents the grant date fair value of restricted stock and PSUs, computed in accordance with ASC Topic 718 (formerly FAS 123R). The grant date
fair value is generally the amount that we would expense in our financial statements over the awards service period, but does not include a reduction for forfeitures. See Notes 2 and 12 to the consolidated financial statements included in our
Annual Report on Form 10-K for the year ended December 31, 2015 for a discussion of the relevant assumptions used in calculating these values. For 2015, grant date fair value of restricted stock awards were as follows:
Mr. Carter$312,500; Mr. Abkemeier$198,448; Mr. Bullock$88,727; Mr. Schoder$605,855; Mr. Scorza88,727; and Mr. Evans259,474. For the 2015 PSUs, the value of the awards at the grant
date assuming that the highest level of performance conditions will be achieved, would be as follows: Mr. Carter$876,305; Mr. Abkemeier$412,234; Mr. Bullock $212,916; Mr. Schoder$274,751; and
Mr. Scorza$212,916.
|
(4)
|
Represents the grant date fair value of stock options, computed in accordance with ASC Topic 718 (formerly FAS 123R). The grant date fair value is
generally the amount that we would expense in our financial statements over the awards service period, but does not include a reduction for forfeitures. See Notes 2 and 12 to the consolidated financial statements included in our Annual Report
on Form 10-K for the year ended December 31, 2015 for a discussion of the relevant assumptions used in calculating these values.
|
(5)
|
Amounts reported in All Other Compensation include the Companys contributions to our 401(k) plan. Under our 401(k) plan, we are
permitted to make profit sharing contributions to each eligible participant. Pre-tax contributions are allocated to each participants individual account and are then invested in selected investment alternatives, which do not include
Inteliquent stock, according to the participants directions. All employee contributions are 100% vested.
|
(6)
|
Pursuant to his employment agreement, Mr. Carters other compensation also includes $79,579 in 2015, for relocation related expenses
including housing in Chicago and flights between Chicago, Illinois and San Diego, California. Pursuant to his employment agreement, Mr. Abkemeiers other compensation also includes $49,800 and $47,291 in 2015 and 2014, respectively, for
relocation related expenses including housing in Chicago and flights between Chicago, Illinois and Atlanta, Georgia. Pursuant to his employment agreement, Mr. Evans
|
44
|
other compensation also includes $18,304, $64,151 and $65,763 in 2015, 2014 and 2013, respectively, for a furnished corporate apartment near our principal offices and flights between Chicago,
Illinois and Oklahoma City, Oklahoma. Pursuant to his employment agreement, Mr. Schoders other compensation also includes $21,869 in 2015, for flights between Chicago, Illinois and Denver, Colorado and other commuting related expenses.
|
(7)
|
In accordance with Item 402(c)(2)(ix) of Regulation S-K and the adopting release thereto (Release 33-8732A), the dividends received on shares
of unvested restricted stock by virtue of the dividend rights contained in the restricted stock award agreements and in connection with the June 28, 2013 payment of a $1.25 special cash dividend, the June 10, 2013, September 27,
2013 and December 30, 2013 payments of $0.0625 regular quarterly dividends and the October 30, 2012 payment of a $3.00 special cash dividend are not reflected in this column. As required by relevant tax law, dividends received on shares of
unvested restricted stock are treated as ordinary income for income tax purposes and for employees, including our named executive officers, are subject to withholding like other ordinary income. Pursuant to the 2014 cash dividends, dividends
received on shares of unvested restricted stock attributable to each named executive officer were: Mr. Abkemeier, $27,000 and Mr. Evans, $26,361. Pursuant to the 2013 cash dividends, Mr. Evans received $176,791 of dividends on shares
of unvested restricted stock.
|
(8)
|
Includes $237,600 of cash severance payments made to Mr. Evans. For additional detail, see Compensation Discussion and
AnalysisEmployment AgreementsG. Edward Evans.
|
Grants of
Plan-Based Awards
The following table provides information regarding estimated possible payouts for
grants of plan-based awards granted under our 2007 Equity Incentive Plan during 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
|
|
|
Estimated future payouts under equity
incentive plan awards
(1)
|
|
|
All Other
Stock
Awards:
Number
of Shares
of Stock
|
|
|
Number of
Securities
Underlying
All
Other
Option
Awards:
Options
|
|
|
Exercise
or Base
Price
Option
Awards
($)
|
|
|
Grant
Date Fair
Value of
Stock
and
Option
Awards
($)
(7)
|
|
|
|
Threshold
#
|
|
|
Target
#
|
|
|
Maximum
#
|
|
|
|
|
|
Matthew Carter Jr.
|
|
|
6/22/2015
|
|
|
|
16,874
|
|
|
|
33,748
|
(2)
|
|
|
67,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
876,305
|
|
|
|
|
6/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,784
|
|
|
|
|
|
|
|
|
|
|
|
312,500
|
|
|
|
|
6/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,467
|
|
|
|
18.52
|
|
|
|
312,500
|
|
Kurt J. Abkemeier
|
|
|
2/23/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,411
|
|
|
|
|
|
|
|
|
|
|
|
96,099
|
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,804
|
|
|
|
|
|
|
|
|
|
|
|
27,349
|
|
|
|
|
3/13/2015
|
|
|
|
9,684
|
|
|
|
19,368
|
(3)
|
|
|
38,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
412,234
|
|
|
|
|
3/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,842
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
|
3/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,847
|
|
|
|
15.49
|
|
|
|
75,000
|
|
John T. Bullock
|
|
|
2/23/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,814
|
|
|
|
|
|
|
|
|
|
|
|
49,977
|
|
|
|
|
3/13/2015
|
|
|
|
5,003
|
|
|
|
10,006
|
(4)
|
|
|
20,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
212,916
|
|
|
|
|
3/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,502
|
|
|
|
|
|
|
|
|
|
|
|
38,750
|
|
|
|
|
3/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,154
|
|
|
|
15.49
|
|
|
|
38,750
|
|
John M. Schoder
|
|
|
1/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
504,600
|
|
|
|
|
2/23/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,886
|
|
|
|
|
|
|
|
|
|
|
|
51,255
|
|
|
|
|
3/13/2015
|
|
|
|
6,456
|
|
|
|
12,912
|
(5)
|
|
|
25,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
274,751
|
|
|
|
|
3/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,228
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
3/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,231
|
|
|
|
15.49
|
|
|
|
50,000
|
|
Brett A. Scorza
|
|
|
2/23/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,814
|
|
|
|
|
|
|
|
|
|
|
|
49,977
|
|
|
|
|
3/13/2015
|
|
|
|
5,003
|
|
|
|
10,006
|
(6)
|
|
|
20,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
212,916
|
|
|
|
|
3/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,502
|
|
|
|
|
|
|
|
|
|
|
|
38,750
|
|
|
|
|
3/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,154
|
|
|
|
15.49
|
|
|
|
38,750
|
|
G. Edward Evans
|
|
|
2/23/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,610
|
|
|
|
|
|
|
|
|
|
|
|
259,474
|
|
(1)
|
Amounts reported in these columns represent the possible threshold, target and maximum payouts for PSUs awarded during 2015 under the 2007 Equity
Incentive Plan. The number of shares that will be delivered is based on the Companys TSR weighted (i) two-thirds against the total stockholder return of all companies in the S&P 500 Index and (ii) one-third against the total
stockholder return of all companies in the S&P Small
|
45
|
Cap 600 Telecommunications Services Index (together, the TSR Metric). The maximum number of shares subject to PSUs that may vest and settle is equal to 200% of target and the
threshold number of shares subject to PSUs that may vest and settle is equal to 50% of target. PSUs granted in 2015 are measured over 18-month, two- and three-year performance periods.
|
(2)
|
Target PSUs for Mr. Carter of 33,748 are made up of grants for 2015, 2016 and 2017 in the amounts of 5,625, 11,249 and 16,874, respectively.
|
(3)
|
Target PSUs for Mr. Abkemeier of 19,368 are made up of grants for 2015, 2016 and 2017 in the amounts of 3,228, 6,456 and 9,684, respectively.
|
(4)
|
Target PSUs for Mr. Bullock of 10,006 are made up of grants for 2015, 2016 and 2017 in the amounts of 1,775, 3,228 and 5,003, respectively.
|
(5)
|
Target PSUs for Mr. Schoder of 12,912 are made up of grants for 2015, 2016 and 2017 in the amounts of 2,260, 4,196 and 6,456, respectively.
|
(6)
|
Target PSUs for Mr. Scorza of 10,006 are made up of grants for 2015, 2016 and 2017 in the amounts of 1,775, 3,228 and 5,003, respectively.
|
(7)
|
Represents the grant date fair value, computed in accordance with ASC Topic 718 (formerly FAS 123R). The grant date fair value is generally the
amount that we would expense in our financial statements over the awards service period, but does not include a reduction for forfeitures. See Notes 2 and 12 to the consolidated financial statements included in our Annual Report on Form 10-K
for the year ended December 31, 2015 for a discussion of the relevant assumptions used in calculating these values. For purposes of the non-vested shares, fair value is calculated using the closing price of our stock the day of the grant date
of $16.82, $17.76, $15.16, $15.49 and $18.52 for the January 1, February 23, March 3, March 13 and June 22 grants, respectively. For PSUs, the fair value is calculated assuming probable performance (or, target
level) is achieved. The PSUs value, assuming the achievement of the target level of performance conditions under the plan, is as follows: Mr. Carter$876,305; Mr. Abkemeier$412,234; Mr. Bullock$212,916;
Mr. Schoder$274,751; and Mr. Scorza$212,916. For additional information relating to the assumptions made by us in valuing these awards for 2015, refer to note 12 of our financial statements in our Form 10-K for the year ended
December 31, 2015, as filed with the SEC.
|
46
Outstanding Equity Awards at Year End
The following table summarizes equity awards granted to our named executive officers that were outstanding at
December 31, 2015 and, accordingly, reflects such adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Securities
Underlying Unexercised
Options (#)
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units of
Stock
That
Have
Not
Vested
(#)
|
|
|
Market
Value of
Shares
or Units
of
Stock
That
Have
Not
Vested
($)
|
|
|
Equity Incentive
Plan
Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
(1)
|
|
|
|
|
|
|
|
Matthew Carter Jr.
|
|
|
|
|
|
|
46,467
|
|
|
|
18.52
|
|
|
|
6/22/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,874
|
(11)
|
|
$
|
299,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,250
|
(13)
|
|
|
199,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,498
|
(15)
|
|
|
399,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,748
|
(17)
|
|
|
599,702
|
|
Kurt J. Abkemeier
|
|
|
|
|
|
|
13,847
|
|
|
|
15.49
|
|
|
|
3/13/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
(5)
|
|
$
|
799,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,842
|
(10)
|
|
$
|
86,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,456
|
(12)
|
|
|
114,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,912
|
(14)
|
|
|
229,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,368
|
(16)
|
|
|
344,169
|
|
John T. Bullock
|
|
|
35,000
|
|
|
|
|
|
|
|
21.81
|
|
|
|
8/26/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,696
|
|
|
|
17,392
|
(a)
|
|
|
2.67
|
|
|
|
3/15/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,641
|
|
|
|
4,925
|
(b)
|
|
|
13.86
|
|
|
|
3/17/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,154
|
|
|
|
15.49
|
|
|
|
3/13/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,059
|
(2)
|
|
$
|
36,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,941
|
(3)
|
|
$
|
52,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,463
|
(6)
|
|
$
|
43,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,877
|
(7)
|
|
$
|
370,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,502
|
(10)
|
|
$
|
44,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,550
|
(12)
|
|
|
63,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,456
|
(14)
|
|
|
114,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,006
|
(16)
|
|
|
177,807
|
|
John M. Schoder
|
|
|
|
|
|
|
9,231
|
|
|
|
15.49
|
|
|
|
3/13/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(4)
|
|
$
|
88,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(8)
|
|
$
|
133,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
(9)
|
|
$
|
533,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,228
|
(10)
|
|
$
|
57,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,520
|
(12)
|
|
|
80,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,392
|
(14)
|
|
|
149,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,912
|
(16)
|
|
|
229,446
|
|
Brett A. Scorza
|
|
|
6,658
|
|
|
|
|
|
|
|
13.65
|
|
|
|
4/22/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
|
|
|
|
21.81
|
|
|
|
8/26/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,696
|
|
|
|
17,392
|
(a)
|
|
|
2.67
|
|
|
|
3/15/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,641
|
|
|
|
4,925
|
(b)
|
|
|
13.86
|
|
|
|
3/17/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,154
|
|
|
|
15.49
|
|
|
|
3/13/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,059
|
(2)
|
|
$
|
36,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,941
|
(3)
|
|
$
|
52,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,463
|
(6)
|
|
$
|
43,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.877
|
(7)
|
|
$
|
370,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,502
|
(10)
|
|
$
|
44,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,550
|
(12)
|
|
|
63,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,456
|
(14)
|
|
|
114,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,006
|
(16)
|
|
|
177,807
|
|
47
(1)
|
Represents, on an award-by-award basis, the number of shares of common stock underlying unexercised options held by our named executive officers
that were outstanding as of December 31, 2015. The vesting schedules of the outstanding unvested option awards are listed below:
|
|
(a)
|
Represents the outstanding unvested portion of the original options granted on March 15, 2013 as of December 31, 2015. One-quarter of the
options granted on March 15, 2013 vested on each of the first and second anniversary dates of the option grant with the remaining two-quarters of the options vesting on an annual basis over the subsequent two years.
|
|
(b)
|
Represents the outstanding unvested portion of the original options granted on March 17, 2014 as of December 31, 2015. One-quarter of the
options granted on March 17, 2014 vested on the first anniversary date of the option grant with the remaining three-quarters of the options vesting on an annual basis over the subsequent three years.
|
(2)
|
Represents the outstanding unvested portion of the original shares of restricted stock granted on March 15, 2013 as of December 31, 2015.
One-quarter of the shares of restricted stock granted on March 15, 2013 vested on the first and second anniversary dates of the award with the remaining two-quarters of the shares vesting on an annual basis over the subsequent two years.
|
(3)
|
Represents the outstanding unvested portion of the original shares of restricted stock granted on September 19, 2013 as of December 31,
2015. One-quarter of the shares of restricted stock granted on September 19, 2013 vested on the first and second anniversary dates of the award with the remaining two-quarters of the shares vesting on an annual basis over the subsequent two
years.
|
(4)
|
Represents the outstanding unvested portion of the original shares of restricted stock granted on November 25, 2013 as of December 31,
2015. One-quarter of the shares of restricted stock granted on November 25, 2013 vested on the first and second anniversary dates of the award with the remaining two-quarters of the shares vesting on an annual basis over the subsequent two
years.
|
(5)
|
Represents the outstanding unvested portion of the original shares of restricted stock granted on January 20, 2014 as of December 31,
2015. One-quarter of the shares of restricted stock granted on January 20, 2014 vested on the first anniversary date of the award with the remaining three-quarters of the shares vesting on an annual basis over the subsequent three years.
|
(6)
|
Represents the outstanding unvested portion of the original shares of restricted stock granted on March 17, 2014 as of December 31, 2015.
One-quarter of the shares of restricted stock granted on March 17, 2014 vested on the first anniversary date of the award with the remaining three-quarters of the shares vesting on an annual basis over the subsequent three years.
|
(7)
|
Represents the outstanding unvested portion of the original shares of restricted stock granted on May 20, 2014 as of December 31, 2015.
All shares of restricted stock granted on May 20, 2014 vest on May 20, 2017.
|
(8)
|
Represents the outstanding unvested portion of the original shares of restricted stock granted on November 24, 2014 as of December 31,
2015. One-quarter of the shares of restricted stock granted on November 24, 2014 vested on the first anniversary date of the award with the remaining three-quarters of the shares vesting on an annual basis over the subsequent three years.
|
(9)
|
Represents the outstanding unvested portion of the original shares of restricted stock granted on January 30, 2015 as of December 31,
2015. One-quarter of the shares of restricted stock granted on January 30, 2015 will vest on the first anniversary date of the award with the remaining three-quarters of the shares vesting on an annual basis over the subsequent three years.
|
(10)
|
Represents the outstanding unvested portion of the original shares of restricted stock granted on March 13, 2015 as of December 31, 2015.
One-quarter of the shares of restricted stock granted on March 13, 2015 will vest on the first anniversary date of the award with the remaining three-quarters of the shares vesting on an annual basis over the subsequent three years.
|
(11)
|
Represents the outstanding unvested portion of the original shares of restricted stock granted on June 22, 2015 as of December 31, 2015.
One-quarter of the shares of restricted stock granted on June 22, 2015 will vest on the first anniversary date of the award with the remaining three-quarters of the shares vesting on an annual basis over the subsequent three years.
|
(12)
|
Represents the number of shares of common stock, at maximum performance, issuable pursuant to PSUs granted on March 13, 2015 that vested on
December 31, 2015. For actual payout amount see Compensation Discussion and AnalysisOverview of Compensation Methodology2015 Total Stockholder Return Performance-Based Awards.
|
(13)
|
Represents the number of shares of common stock, at maximum performance, issuable pursuant to PSUs granted on June 22, 2015 that vested on
December 31, 2015. For actual payout amount see ?Compensation Discussion and AnalysisOverview of Compensation Methodology2015 Total Stockholder Return Performance-Based Awards.
|
(14)
|
Represents the number of shares of common stock, at maximum performance, subject to PSUs granted on March 13, 2015 that will vest on
December 31, 2016.
|
(15)
|
Represents the number of shares of common stock, at maximum performance, subject to PSUs granted on June 22, 2015 that will vest on
December 31, 2016.
|
(16)
|
Represents the number of shares of common stock, at maximum performance, subject to PSUs granted on March 13, 2015 that will vest on
December 31, 2017.
|
(17)
|
Represents the number of shares of common stock, at maximum performance, subject to PSUs granted on June 22, 2015 that will vest on
December 31, 2017.
|
48
Option Exercises and Stock Vested
With respect to our named executive officers, the following table provides information concerning options that were
exercised and restricted stock awards that vested during 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired
on
Exercise (#)
|
|
|
Value Realized
Upon Exercise ($)
|
|
|
Number of Shares
Acquired Upon
Vesting (#)
|
|
|
Value Realized
Upon Vesting ($)
|
|
Matthew Carter Jr.
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
Kurt J. Abkemeier
|
|
|
|
|
|
$
|
|
|
|
|
22,215
|
|
|
$
|
395,698
|
|
John T. Bullock
|
|
|
|
|
|
$
|
|
|
|
|
6,135
|
|
|
$
|
110,628
|
|
John M. Schoder
|
|
|
|
|
|
$
|
|
|
|
|
7,886
|
|
|
$
|
147,105
|
|
Brett A. Scorza
|
|
|
|
|
|
$
|
|
|
|
|
6,135
|
|
|
$
|
110,628
|
|
G. Edward Evans
|
|
|
198,585
|
|
|
$
|
3,117,112
|
|
|
|
47,662
|
|
|
$
|
820,778
|
|
49
Potential Payments upon Termination or Change in Control
This table shows the potential compensation due to named executive officers upon a change in control or
termination of employmentrelated or unrelated to a change in controlby us without cause or by the executive with good reason, due to the executives death or disability, and by us with cause or by the executive without good reason.
The amounts shown assume that a change in control or termination of employment was effective December 31, 2015. The amounts shown are only estimates of the amounts that would be due to the executives upon a change in control or termination of
employment and do not reflect tax positions we may take or the accounting treatment of such payments. Actual amounts due can only be determined at the time of a change in control or separation. Although the calculations are intended to provide
reasonable estimates of the potential benefits, they are based on numerous assumptions and do not represent the actual amount an executive would receive if an eligible change in control or termination event were to occur.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Executive
Officer
(1)
|
|
Termination
without
Cause
(2)
or
resignation with
Good Reason
(3)
or
Any Reason After
Receiving a
Notice
of
Non-Renewal
Outside of a Change
of Control
(4)
|
|
|
Termination
with
Cause
(2)
or
resignation without
Good Reason
(3)
Outside of a
Change
of
Control
(5)
|
|
|
Disability
(6)(7)
|
|
|
Death
(7)
|
|
|
Change
of
Control
(8)
|
|
|
Termination
without
Cause
(2)
or
resignation with
Good Reason
(3)
or
Any Reason After
Receiving a
Notice
of
Non-Renewal
following Change
of Control
(8)(9)(10)
|
|
Matthew Carter Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Value of Cash Payment
|
|
$
|
519,230
|
|
|
$
|
19,230
|
|
|
$
|
19,230
|
|
|
$
|
19,230
|
|
|
|
N/A
|
|
|
$
|
1,019,230
|
|
Estimated Value of Equity Awards
|
|
$
|
174,910
|
|
|
|
N/A
|
|
|
$
|
499,749
|
|
|
$
|
499,749
|
|
|
$
|
349,823
|
|
|
$
|
699,646
|
|
Total
|
|
$
|
694,141
|
|
|
$
|
19,230
|
|
|
$
|
518,979
|
|
|
$
|
518,979
|
|
|
$
|
349,823
|
|
|
$
|
1,718,877
|
|
|
|
|
|
|
|
|
Kurt J. Abkemeier
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Value of Cash Payment
|
|
$
|
342,692
|
|
|
$
|
12,692
|
|
|
$
|
12,692
|
|
|
$
|
12,692
|
|
|
|
N/A
|
|
|
$
|
672,692
|
|
Estimated Value of Equity Awards
|
|
$
|
353,315
|
|
|
|
N/A
|
|
|
$
|
1,031,987
|
|
|
$
|
1,031,987
|
|
|
$
|
573,355
|
|
|
$
|
1,146,710
|
|
Total
|
|
$
|
696,007
|
|
|
$
|
12,692
|
|
|
$
|
1,044,679
|
|
|
$
|
1,044,679
|
|
|
$
|
573,355
|
|
|
$
|
1,819,402
|
|
|
|
|
|
|
|
|
John T. Bullock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Value of Cash Payment
|
|
$
|
280,385
|
|
|
$
|
10,385
|
|
|
$
|
10,385
|
|
|
$
|
10,385
|
|
|
|
N/A
|
|
|
$
|
550,385
|
|
Estimated Value of Equity Awards
|
|
$
|
214,468
|
|
|
|
N/A
|
|
|
$
|
904,542
|
|
|
$
|
904,542
|
|
|
$
|
481,429
|
|
|
$
|
962,857
|
|
Total
|
|
$
|
494,853
|
|
|
$
|
10,385
|
|
|
$
|
914,927
|
|
|
$
|
914,927
|
|
|
$
|
481,429
|
|
|
$
|
1,513,242
|
|
|
|
|
|
|
|
|
John M. Schoder
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Value of Cash Payment
|
|
$
|
280,385
|
|
|
$
|
10,385
|
|
|
$
|
10,385
|
|
|
$
|
10,385
|
|
|
|
N/A
|
|
|
$
|
550,385
|
|
Estimated Value of Equity Awards
|
|
$
|
190,159
|
|
|
|
N/A
|
|
|
$
|
909,156
|
|
|
$
|
909,156
|
|
|
$
|
492,339
|
|
|
$
|
984,678
|
|
Total
|
|
$
|
470,543
|
|
|
$
|
10,385
|
|
|
$
|
919,541
|
|
|
$
|
919,541
|
|
|
$
|
492,339
|
|
|
$
|
1,535,063
|
|
|
|
|
|
|
|
|
Brett A. Scorza
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Value of Cash Payment
|
|
$
|
280,385
|
|
|
$
|
10,385
|
|
|
$
|
10,385
|
|
|
$
|
10,385
|
|
|
|
N/A
|
|
|
$
|
550,385
|
|
Estimated Value of Equity Awards
|
|
$
|
214,468
|
|
|
|
N/A
|
|
|
$
|
904,542
|
|
|
$
|
904,542
|
|
|
$
|
481,429
|
|
|
$
|
962,857
|
|
Total
|
|
$
|
494,853
|
|
|
$
|
10,385
|
|
|
$
|
914,927
|
|
|
$
|
914,927
|
|
|
$
|
481,429
|
|
|
$
|
1,513,242
|
|
|
|
|
|
|
|
|
G. Edward Evans
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Value of Cash Payment
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Estimated Value of Equity Awards
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Total
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
50
(1)
|
The amounts described in this table represent compensation provided under the executives employment agreement, the 2003 Stock Incentive Plan
and the 2007 Equity Incentive Plan. The table excludes certain amounts due pursuant to plans that are available generally to all salaried employees.
|
(2)
|
Cause for purposes of the 2003 Stock Incentive Plan has the meaning given in any employment agreement with the optionee (or holder of
restricted stock or other rights), if applicable, or if there is no such agreement, as determined by the Compensation Committee, which may determine that cause includes among other matters the willful failure or refusal of the optionee
(or holder of restricted stock or other rights) to perform and carry out his or her assigned duties and responsibilities diligently and in a manner satisfactory to the Compensation Committee.
|
Cause for purposes of the 2007 Equity Incentive Plan means the occurrence of one or more of the following
events:
(i) Conviction of a felony or any crime or offense lesser than a felony involving the property of the
Company or a Subsidiary;
(ii) Conduct that has caused demonstrable and serious injury to the Company or a
Subsidiary, monetary or otherwise;
(iii) Willful refusal to perform or substantial disregard of duties
properly assigned, as determined by the Company or a Subsidiary, as the case may be; or
(iv) Breach of duty of
loyalty to the Company or a Subsidiary or any act of fraud or dishonesty with respect to the Company or a Subsidiary.
Cause for purposes of the named executive officers employment agreements means any of the following:
(i) Executives willful misconduct in the performance of his duties for the Company, or Executives willful
failure to abide by or comply with any legal policy or directive of the Board;
(ii) conviction of or plea of
guilty or any other plea other than not guilty to a felony, or any crime involving dishonesty or moral turpitude;
(iii) the violation by Executive of any material provision of this Agreement which either is not cured within ten (10) days after written notice is given to Executive by the Company or constitutes a
habitual breach; or
(iv) Executives dishonesty, misappropriation or fraud with regard to the business or
affairs of the Company or its affiliates.
(3)
|
Good Reason for purposes of the named executive officers employment agreements means, without Executives written consent:
|
(i) a material adverse change in Executives title or the duties assigned to Executive;
or
(ii) any material failure by the Company to comply with its obligations under this Agreement,
but in each such case only if Executive has provided notice to the Company of the existence of the condition described in
clause (i) or (ii) of this definition within ninety (90) days following the initial existence of the condition, and the Company has not remedied such condition within thirty (30) days after receiving such notice.
(4)
|
Estimated Value of Cash Payment
represents cash payments of any unpaid base salary through the date of termination and any accrued vacation
pay and severance pay equal to 12 months base salary.
|
Estimated Value of Equity
Awards
represents the difference between the exercise price and the value of our common stock on December 31, 2015 with respect to any unvested stock options, the value of our common stock on December 31, 2015 with respect to unvested
restricted stock, as the case may be, held by the executive as of December 31, 2015, and the value of our common stock on December 31, 2015 with respect to performance stock units, assuming the performance stock units were settled in
common stock at 100% of the target level.
(5)
|
Estimated Value of Cash Payment
represents cash payments of any unpaid base salary through the date of termination and any accrued vacation
pay and any unreimbursed business expenses.
|
Estimated Value of Equity Awards
are not
subject to acceleration upon a termination with Cause or resignation without Good Reason.
51
(6)
|
Disability for purposes of the 2003 Stock Incentive Plan has the meaning assigned in Section 22(e)(3) of the Internal Revenue Code:
[a]n individual is permanently and totally disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than 12 months. An individual shall not be considered to be permanently and totally disabled unless he furnishes proof of the existence thereof in such form and manner, and at
such times, as the Secretary may require.
|
Disability for purposes of the
2007 Equity Incentive Plan means a disability that would entitle an eligible participant to payment of monthly disability payments under any Company disability plan or as otherwise determined by the Committee.
Disability for purposes of the named executive officers employment agreements means Executive is
prevented by illness, accident, disability or any other physical or mental condition (to be determined by means of a written opinion of a competent medical doctor chosen by mutual agreement of the Company and Executive or Executives personal
representative(s)) from substantially performing Executives duties and responsibilities hereunder for one (1) or more periods totaling ninety (90) days in any twelve (12)-month period.
(7)
|
Estimated Value of Cash Payment
represents cash payments of any unpaid base salary through the date of termination and any accrued vacation
pay and any unreimbursed business expenses.
|
Estimated Value of Equity Awards
represents the difference between the exercise price and the value of our common stock on December 31, 2015 with respect to any unvested stock options, and the value of our common stock on December 31, 2015 with respect to unvested
restricted stock, as the case may be, held by the executive as of December 31, 2015.
(8)
|
Change of control for purposes of the 2003 Stock Incentive Plan is any transaction or series of related transactions whether by
consolidation, merger, sale or issuance of equity securities, or sale or transfer of all or substantially all of our assets, or otherwise, that results in our equity holders immediately prior to such transaction or series of transactions owning less
than 50% of the equity or voting power of the surviving entity, or controlling less than 50% of our assets, thereafter.
|
Change in control for purposes of the 2007 Equity Incentive Plan means the occurrence of one of the following events:
(i) if any person or group as those terms are used in Sections 13(d) and 14(d) of the Exchange Act
or any successors thereto, is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act or any successor thereto), directly or indirectly, of securities of the Company representing 50% or more of the combined
voting power of the Companys then outstanding securities;
(ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board and any new directors whose election by the Board or nomination for election by the Companys stockholders was approved by at least two thirds of the directors then
still in office who either were directors at the beginning of the period or whose election was previously so approved cease for any reason to constitute a majority thereof;
(iii) consummation of a merger or consolidation of the Company with any other corporation, other than a merger or
consolidation (A) which would result in all or a portion of the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) by which the corporate existence of the Company is
not affected and following which the Companys chief executive officer and directors retain their positions with the Company (and constitute at least a majority of the Board); or
(iv) consummation of a plan of complete liquidation of the Company or a sale or disposition by the Company of all or
substantially all the Companys assets.
Change of control for purposes of the named executive
officers employment agreements means any transaction or series of related transactions whether by consolidation, merger, sale or issuance of equity
52
securities, or sale or transfer of all or substantially all of the Companys assets, or otherwise, in which any one person, or more than one person acting as a group:
(i) acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more
than 50 percent of the total fair market value or total voting power of the stock of the Company; or
(ii)
acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than forty (40) percent of the
total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions (excluding any asset transferred to (A) stockholder of the Company (immediately before the asset transfer) in exchange for or
with respect to its stock, (B) an entity, fifty (50) percent or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (C) a person, or more than one person acting as a group, that owns,
directly or indirectly, fifty (50) percent or more of the total value or voting power of all the outstanding stock of the Company, or (D) an entity, at least 50 percent of the total value or voting power of which is owned, directly or
indirectly, by a person described in clause (ii)(C) of this definition).
This definition is intended to comply
with the definitions of change in ownership of a corporation and change in ownership of a substantial portion of the assets of a corporation set forth in the Treasury Regulations issued under section 409A(a)(2)(A)(v) of the
Internal Revenue Code and shall be interpreted in a manner consistent with such intention.
(9)
|
The amounts described in this column represent compensation due to a named executive officer assuming that he or she is either terminated without
cause or resigns with good reason within twelve (12) months of a change in control.
|
Estimated Value of Cash Payment
represents cash payments of any unpaid base salary through the date of termination,
and any accrued vacation pay, and severance pay equal to
twenty-four
(24) months base salary.
Estimated Value of Equity Awards
represents the difference between the exercise price and the value of our common stock on December 31, 2015 with respect to any unvested stock options, and the
value of our common stock on December 31, 2015 with respect to unvested restricted stock, as the case may be, held by the executive that are subject to accelerated vesting upon termination without cause or resignation with good reason in
connection with a change of control.
(10)
|
The amounts listed in this column represent estimates of total compensation due to our named executive officers at the time of a change of control
and at termination without cause or resignation with good reason, or any reason after receiving a notice of non-renewal, following a change of control.
|
(11)
|
Mr. Evans ceased serving as our Chief Executive Officer on June 21, 2015.
|
Pension Benefits
None of our named executive officers participate in or have account balances in qualified or non-qualified defined
benefit plans sponsored by us.
Non-Qualified Deferred Compensation
None of our named executive officers participate in or have account balances in non-qualified defined contribution plans
or other deferred compensation plans sponsored by us. The Compensation Committee may elect to provide our officers and other employees with non-qualified defined contribution or deferred compensation benefits if the Compensation Committee determines
that doing so is in our best interests. See Elements of Compensation401(k) Plan for a description of the 401(k) retirement plan which we maintain.
53
Non-Employee Director Compensation and Benefits
The following table summarizes our estimate of the compensation that our non-employee directors earned for services as
members of our Board or any committee thereof during 2015, including amounts for meetings through December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned
or Paid
in Cash
($)
(1)
|
|
|
Stock
Awards
($)
(2)(3)(4)(5)
|
|
|
Option
Awards
($)
(3)(4)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
James P. Hynes
|
|
$
|
85,000
|
(a)
|
|
$
|
100,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
185,000
|
|
Joseph A. Beatty
|
|
|
75,000
|
(b)
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,000
|
|
Edward M. Greenberg
|
|
|
65,000
|
(c)
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
165,000
|
|
Lawrence M. Ingeneri
|
|
|
60,000
|
(d)
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160,000
|
|
Timothy A. Samples
|
|
|
65,000
|
(e)
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
165,000
|
|
Rian J. Wren
|
|
|
50,000
|
(f)
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
Lauren F. Wright
|
|
|
60,000
|
(g)
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160,000
|
|
(1)
|
Reflects annual fees paid to our non-employee directors for their Board service during 2015.
|
|
(a)
|
Reflects fees of $50,000 and $35,000 in respect of Mr. Hynes Board service and in connection with his being Chairman of the Board,
respectively.
|
|
(b)
|
Reflects fees of $50,000 and $25,000 in respect of Mr. Beattys Board service and in connection with his serving as (i) the Chair of
the Audit Committee and (ii) as a member of the Nominating and Corporate Governance Committee, respectively.
|
|
(c)
|
Reflects fees of $50,000 and $15,000 in respect of Mr. Greenbergs Board service and in connection with his serving as (i) the Chair
of the Nominating and Corporate Governance Committee and (ii) as a member of the Compensation Committee, respectively.
|
|
(d)
|
Reflects fees of $50,000 and $10,000 in respect of Mr. Ingeneris Board service and in connection with his serving as (i) a member of
the Audit Committee and (ii) as a member of the Nominating and Corporate Governance Committee, respectively.
|
|
(e)
|
Reflects fees of $50,000 and $15,000 in respect of Mr. Samples Board service and in connection with his serving as (i) the Chair of
the Compensation Committee and (ii) as a member of the Audit Committee, respectively.
|
|
(f)
|
Reflects fees of $50,000 in respect of Mr. Wrens Board service.
|
|
(g)
|
Reflects fees of $50,000 and $10,000 in respect of Ms. Wrights Board service and in connection with her serving as (i) a member of
the Audit Committee and (ii) as a member of the Compensation Committee, respectively.
|
(2)
|
Represents the grant date fair value of restricted stock awarded to each director in 2015, computed in accordance with ASC Topic 718 (formerly FAS
123R). The grant date fair value is generally the amount that we would expense in our financial statements over the awards service period, but does not include a reduction for forfeitures. For an additional discussion of the assumptions used
for purposes of determining stock-based compensation during 2015, see Notes 2 and 12 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015.
|
(3)
|
Represents the grant date fair value of options awarded to the director in 2015, computed in accordance with ASC Topic 718 (formerly FAS 123R). The
grant date fair value is generally the amount that we would expense in our financial statements over the awards service period, but does not include a reduction for forfeitures. For an additional discussion of the assumptions used for purposes
of determining stock-based compensation during 2015, see Notes 2 and 12 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015.
|
54
(4)
|
The aggregate number of shares subject to option awards (representing unexercised option awardsboth exercisable and unexercisable) and
unvested shares of restricted stock awards held by each non-employee director at December 31, 2015 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares Subject to
Option Awards (Exercisable
and Unexercisable) Held as
of December 31,
2015 (#)
|
|
|
Number of Shares Restricted
Stock Awards
(Unvested)
Held as of December 31, 2015 (#)
|
|
James P. Hynes
|
|
|
|
|
|
|
5,482
|
(a)
|
Joseph A. Beatty
|
|
|
7,879
|
(a)
|
|
|
2,741
|
(a)
|
Edward M. Greenberg
|
|
|
|
|
|
|
5,482
|
(a)
|
Lawrence M. Ingeneri
|
|
|
|
|
|
|
5,482
|
(a)
|
Timothy A. Samples
|
|
|
|
|
|
|
5,482
|
(a)
|
Rian J. Wren
|
|
|
502,924
|
|
|
|
5,482
|
(a)
|
|
(a)
|
The option award and the restricted stock awards vest on May 19, 2016.
|
(5)
|
In accordance with Item 402(c)(2)(ix) of Regulation S-K and the adopting release thereto (Release 33-8732A), the dividends received on shares
of unvested restricted stock by virtue of the dividend rights contained in the restricted stock award agreements and in connection with the March 12, 2015, June 8, 2015, September 7, 2015 and December 9, 2015 payments
of $0.15 per share regular quarterly dividends are not reflected in this column. As required by relevant tax law, dividends received on shares of unvested restricted stock are treated as ordinary income for income tax purposes and for employees,
including our named executive officers, are subject to withholding like other ordinary income. Pursuant to the 2015 cash dividends, dividends received on shares of unvested restricted stock attributable to each non-employee director were: Mr. Hynes,
$3,511; Mr. Beatty, $2,277; Mr. Greenberg, $3,511; Mr. Ingeneri, $3,511; Mr. Samples, $3,511; Mr. Wren, $3,511 and Ms. Wright, $3,511.
|
Director compensation is reviewed annually by the Compensation Committee and, except as described above, paid quarterly in the form of either cash or stock consideration as determined by the Compensation
Committee. For 2015, (i) annual director compensation (not including compensation for serving on any committee or as Chairman of our Board) is targeted to equal $150,000 in the form of cash and/or stock consideration to be paid on a quarterly
basis, (ii) the Chairman of our Board receives an additional annual fee of $35,000 (iii) the Chairman of the Compensation Committee and the Nominating and Corporate Governance Committee will each receive an additional annual fee of $10,000
and the Chairman of the Audit Committee will receive an additional annual fee of $20,000 and (iv) each non-Chairman member of a committee will receive an additional annual fee of $5,000 for each committee on which such member serves. In
addition, our directors received pro-rated payments based on the time they served as the chair of a committee or as a member of a committee, respectively.
In addition, directors are reimbursed for their business expenses related to their attendance at Board and committee meetings, including room, meals and transportation to and from Board and committee
meetings (e.g., commercial flights, cars and parking).
Limitations on Liability and Indemnification Matters
As permitted by the Delaware General Corporation Law, we adopted provisions in our amended and restated certificate of
incorporation that limit or eliminate the personal liability of our directors for a breach of their fiduciary duty of care as a director. The duty of care generally requires that, when acting on behalf of the corporation, directors exercise an
informed business judgment based on all material information reasonably available to them. However, these provisions do not eliminate or limit the liability of any of our directors for:
|
|
|
any breach of the directors duty of loyalty to us or our stockholders;
|
|
|
|
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
|
55
|
|
|
under Section 174 of the Delaware General Corporation Law, which related to unlawful payments or dividends or unlawful stock repurchases or
redemptions; or
|
|
|
|
any transaction from which the director derived an improper personal benefit.
|
Any amendment to or repeal of these provisions will not eliminate or reduce the effect of these provisions in respect of
any act or failure to act, or any cause of action, suit or claim that would accrue or arise prior to any amendment or repeal or adoption of an inconsistent provision. If the Delaware General Corporation Law is amended to provide for further
limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the Delaware General Corporation Law.
In addition, the certificate of incorporation provides that we must indemnify our directors, officers and certain other
agents to the fullest extent permitted under Delaware law, and we must advance expenses, including attorneys fees, to our directors and officers in connection with legal proceedings, subject to very limited exceptions.
In addition to the indemnification provided for in our certificate of incorporation, we have and may in the future enter
into separate indemnification agreements with each of our directors and named executive officers which are broader than the specific indemnification provisions contained in our certificate of incorporation. These indemnification obligations may
require us, among other things, to indemnify our directors and executive officers for certain expenses, including attorneys fees, judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding
arising out of his service as one of our directors or executive officers, or any of our subsidiaries or any other company or enterprise to which the person provides services at our request. We believe that these provisions and agreements are
necessary to attract and retain qualified individuals to serve as directors and executive officers.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is therefore unenforceable.
Directors and Officers
Insurance
We currently maintain a directors and officers liability insurance policy that
provides our directors and officers with liability coverage relating to certain potential liabilities.
56
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Statement of Policy Regarding Transactions with Related Persons
Prior to the completion of our initial public offering, our Board adopted a statement of policy relating to the Audit
Committees review and approval of transactions with related persons that are required to be disclosed in proxy statements by SEC regulations, which we refer to as related person transactions. A related person is defined
under the applicable SEC regulation and includes our directors, executive officers, and 5% or more beneficial owners of our common stock. The Audit Committee administers procedures adopted by our Board with respect to related person transactions and
reviews all such transactions. At times, it may be advisable to initiate a transaction before the Audit Committee has evaluated it, or a transaction may begin before discovery of a related persons participation. In such instances, management
consults with the Chairman of the Audit Committee to determine the appropriate course of action, which may include the Audit Committees subsequent ratification of such transaction. Approval or ratification of a related person transaction
requires the affirmative vote of the majority of disinterested directors on the Audit Committee. It is our policy that directors interested in a related person transaction will recuse themselves from any vote of a related person transaction in which
they have an interest. In approving or ratifying any related person transaction, the Audit Committee shall consider all of the relevant facts and circumstances available, including (if applicable) but not limited to: the benefits to us; the impact
on a directors independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the availability of other sources for
comparable products or services; the terms of the transaction; and the terms available to unrelated third parties or to employees generally. The Audit Committee periodically reports on its activities to the Board.
Rule 10b5-1 Trading Plans
Certain of our named executive officers and directors and other officers have adopted written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buy or sell shares of our
common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or executive officer when entering into the plan, without further direction from such director or executive
officer. Any director or executive officer party to such plan may amend or terminate it in some circumstances. Our directors and executive officers may also buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession
of material, nonpublic information.
57
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Audit Committee has appointed Deloitte & Touche LLP as our independent registered public accounting firm for
the year ending December 31, 2016. Stockholders are being asked to ratify the appointment of Deloitte & Touche LLP at the annual meeting pursuant to Proposal No. 2.
The following table shows the fees paid or accrued by us for audit and other services provided by Deloitte &
Touche LLP for years 2015 and 2014.
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2015
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2014
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Audit Fees
(1)
($)
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751,000
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604,500
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All Other Fees
(2)
($)
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3,000
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3,000
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Total ($)
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754,000
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607,500
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(1)
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Audit fees represent fees for professional services provided in connection with the audit of our financial statements and the review of our
quarterly financial statements, including related services such as comfort letters, consents and assistance with and review of documents filed with the SEC.
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(2)
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All other fees represent a subscription fee for an on-line research service providing access to accounting literature.
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The Audit Committee has adopted a policy of pre-approval of audit and permitted non-audit services by our independent
registered public accounting firm. The Chairman of the Audit Committee has been delegated authority to pre-approve such services on behalf of the Audit Committee, provided that such pre-approved services are reported to the full Audit Committee at
its next scheduled meeting.
All services performed by our independent registered public accounting firm were
pre-approved by the Audit Committee in accordance with this policy.
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REPORT OF THE AUDIT COMMITTEE
All of the members of the Audit Committee are independent under Nasdaq listing standards and the SEC rules. The Board
adopted a written Audit Committee charter, which is available in the Investor Relations section of our website at
www.inteliquent.com
.
The Audit Committee oversees our financial reporting process on behalf of the Board. Management, however, has the primary responsibility to establish and maintain a system of internal controls over
financial reporting, to plan and conduct audits and to prepare consolidated financial statements in accordance with generally accepted accounting principles. Deloitte & Touche LLP, our independent registered public accounting firm, is
responsible for performing an independent audit of the Companys consolidated financial statements in conformity with the auditing standards of the Public Company Accounting Oversight Board (United States) and issuing a report thereon. The
Audit Committee is responsible for monitoring and reviewing these procedures. It is not the Audit Committees duty or responsibility to conduct auditing or accounting reviews or procedures. The members of the Audit Committee are not employees
of Inteliquent, Inc. and are not necessarily accountants or auditors by profession or experts in the fields of accounting or auditing. Therefore, the Audit Committee has relied, without independent verification, on managements representation
that the Companys consolidated financial statements have been prepared with integrity and objectivity and in conformity with generally accepted accounting principles and on the representations of Deloitte & Touche LLP included in its
report on the Companys consolidated financial statements.
In fulfilling its oversight responsibilities,
the Audit Committee met and held discussions, together and separately, with management and Deloitte & Touche LLP. Management represented to the Audit Committee that the Companys audited financial statements for the year ended
December 31, 2015 were prepared in accordance with U.S. generally accepted accounting principles. The Audit Committee reviewed and discussed with management and Deloitte & Touche LLP the audited financial statements for 2015. In
addition, the Audit Committee has evaluated its performance during 2015 and believes it has materially satisfied its responsibilities under its charter for the prior year.
The Audit Committee also discussed with Deloitte & Touche LLP the matters required to be discussed by Auditing
Standard No. 16, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board and Rule 2-07 of Regulation S-X, including a discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. In addition, the Audit Committee has received from Deloitte & Touche LLP the written disclosures required by the applicable
requirements of the Public Company Accounting Oversight Board regarding the independent accountants communications with the Audit Committee concerning independence, as modified or supplemented, and has discussed with them their independence
relating to Inteliquent, Inc. In accordance with provisions of the Sarbanes-Oxley Act of 2002, the Audit Committee pre-approved all audit and non-audit services performed by Deloitte & Touche LLP.
Based on the Audit Committees review and discussions of the matters referred to above, the Audit Committee
recommended to the Board (and the Board has approved) that the audited financial statements be included in the Companys Annual Report on Form 10-K for the year ended December 31, 2015 for filing with the SEC. The Audit Committee has also
selected and appointed Deloitte & Touche LLP as the Companys independent registered public accounting firm for the year ending December 31, 2016, subject to stockholder ratification.
The Audit Committee
of the Board of Directors
Joseph A. Beatty, Chairman
Laurence M. Ingeneri
Timothy A. Samples
Lauren F. Wright
59
OTHER MATTERS
Stockholder Proposals and Director Nominations
In order to be considered for inclusion in our Proxy Statement for our 2017 annual meeting, stockholder proposals must
comply with Rule 14a-8(e) of the Exchange Act. Stockholder proposals submitted for consideration in the 2017 Proxy Statement must be submitted in writing to us at the Office of the Corporate Secretary, at the address below, and must be received by
December 9, 2016.
In addition, our by-laws include advance notice provisions relating to stockholder
nominations for directors or other business not submitted for inclusion in our Proxy Statement. The advance notice provisions provide that, among other things, stockholders provide us with timely written notice regarding such nominations or other
business and otherwise satisfy the requirements set forth in our by-laws. To be timely, a stockholder who intends to present nominations for directors or a proposal at next years annual meeting other than pursuant to Rule 14a-8 must provide
written notice of the nominations or the other business they wish to propose to us at the Office of the Corporate Secretary, at the address below, and must be received no earlier than January 19, 2017, and no later than February 8, 2017.
For such proposals that are not timely filed, we retain discretion to vote proxies we receive.
Notice of a
proposal must include:
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(i)
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a brief description of (A) the business desired to be brought before such meeting, (B) the reasons for conducting such business at the
meeting, and (C) any material interest of the proposing stockholder or beneficial owner, if any, in such business, including a description of all agreements, arrangements and understanding between such stockholder or beneficial owner and any
other person (including the name(s) of such other person(s)) in connection with or related to the proposal of such business by the stockholder;
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(ii)
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if the matter the stockholder giving the notice proposes to bring before such meeting involves an amendment to the by-laws, the specific wording of
such proposed amendment; and
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(iii)
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as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made, (A) the name and record
address of such stockholder and of such beneficial owner, (B) the class or series and number of shares of our capital stock which are, directly or indirectly, beneficially owned and owned of record by such stockholder and beneficial owner,
(C) the class or series, if any, and number of options, warrants, convertible securities, stock appreciation rights or similar rights with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class
or series of shares or other securities of the Company or with a value derived in whole or in part from the value of any class or series of shares or other securities of the Company, whether or not such instrument or right shall be subject to
settlement in the underlying class or series of shares or other securities of the Company (each, a Derivative Security), which are, directly or indirectly, beneficially owned by such stockholder and beneficial owner, (D) a
description of any other direct or indirect opportunity to profit or share in any profit (including any performancebased fees) derived from any increase or decrease in the value of shares or other securities of the Company, (E) any proxy,
contract, arrangement, understanding, or relationship pursuant to which such stockholder or beneficial owner has a right to vote any shares or other securities of the Company, (F) any rights to dividends on the shares of the Company owned
beneficially by such stockholder or such beneficial owner that are separated or separable from the underlying shares of the Company, (G) any proportionate interest in shares of the Company or Derivative Securities held, directly or indirectly,
by a general or limited partnership in which such stockholder or beneficial owner is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, if any, (H) a description of all agreements, arrangements and
understandings between such stockholder or beneficial owner and any other person(s) (including their name(s)) in connection with or related to the ownership or voting of our capital stock or Derivative
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Securities, (H) (x) a statement as to whether either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of at least the percentage of
the Companys voting shares required under applicable law to approve the proposal and/or otherwise solicit proxies from stockholders in support of such proposal and (y) any other information relating to such stockholder or beneficial owner
that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and
the rules and regulations promulgated thereunder, and (I) a representation that the stockholder is a holder of record of shares of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to
propose such business.
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Notice of a nomination must include:
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(i)
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as to each person whom you propose to nominate for election as a director (A) all information relating to the person that would be required to
be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to the Exchange Act and the rules and regulations promulgated thereunder, (B) a description of
all direct and indirect compensation and other material agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their
respective affiliates and associates, or others acting in concert therewith, on the one hand, and the person you propose to nominate for election as director and his or her respective affiliates and associates, or others acting in concert therewith,
on the other hand, including all information that would be required to be disclosed pursuant to Item 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made,
or any affiliate or associate thereof or person acting in concert therewith, were the registrant for purposes of such rule and the nominee were a director or executive officer of such registrant, and (C) a completed and signed
questionnaire, representation and agreement required by Section 11(d) of our by-laws; and
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(ii)
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as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made, (A) the name and record
address of such stockholder and of such beneficial owner, (B) the class or series and number of shares of our capital stock which are, directly or indirectly, beneficially owned and owned of record by such stockholder and beneficial owner,
(C) the class or series, if any, and number of options, warrants, convertible securities, stock appreciation rights or similar rights with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class
or series of shares or other securities of the Company or with a value derived in whole or in part from the value of any class or series of shares or other securities of the Company, whether or not such instrument or right shall be subject to
settlement in the underlying class or series of shares or other securities of the Company (each, a Derivative Security), which are, directly or indirectly, beneficially owned by such stockholder and beneficial owner, (D) a
description of any other direct or indirect opportunity to profit or share in any profit (including any performancebased fees) derived from any increase or decrease in the value of shares or other securities of the Company, (E) any proxy,
contract, arrangement, understanding, or relationship pursuant to which such stockholder or beneficial owner has a right to vote any shares or other securities of the Company, (F) any rights to dividends on the shares of the Company owned
beneficially by such stockholder or such beneficial owner that are separated or separable from the underlying shares of the Company, (G) any proportionate interest in shares of the Company or Derivative Securities held, directly or indirectly,
by a general or limited partnership in which such stockholder or beneficial owner is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, if any, (H) a description of all agreements, arrangements and
understandings between such stockholder or beneficial owner and any other person(s) (including their name(s)) in connection with or related to the ownership or voting of our capital stock or Derivative Securities, (I) a statement as to whether
either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of at least the percentage of the Companys voting shares
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required under applicable law to elect such stockholders nominees and/or otherwise to solicit proxies from stockholders in support of such nomination, (J) any other information
relating to such stockholder or beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election
pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, and (K) a representation that the stockholder is a holder of record of shares of the Company entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to propose the nomination.
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Such notice must be
accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. Such notice must also comply with all other requirements of our by-laws.
You may contact our Corporate Secretary at our principal executive offices for a copy of the relevant by-law provisions
regarding the requirements for making stockholder proposals and nominating director candidates.
Proponents
must submit notices of proposals and nominations in writing to the following address:
Corporate Secretary
Inteliquent, Inc.
550 West Adams Street, Suite 900
Chicago, Illinois 60661
The Corporate Secretary will forward the
notices of proposals and nominations to the Nominating and Corporate Governance Committee for consideration.
Cost of Solicitation
We pay the cost of the annual meeting and the cost of soliciting proxies. We
do not expect to engage a third-party proxy solicitor in connection with the 2016 annual meeting of stockholders; however, if we do retain a proxy solicitor, it is expected that we would retain Georgeson Inc. and pay a fee between $7,500 and $20,000
plus expenses. In addition to soliciting proxies by mail, we have made arrangements with banks, brokers and other holders of record to send proxy materials to you, and we will reimburse them for their expenses in doing so.
62
APPENDIX A
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
INTELIQUENT, INC.
* * * *
Adopted in accordance with the provisions
of §242 of the General Corporation Law
of the State of Delaware
* * * *
The undersigned, on behalf of Inteliquent, Inc., a corporation duly organized and existing under and by virtue of the
General Corporation Law of the State of Delaware (the Corporation), DOES HEREBY CERTIFY as follows:
FIRST
: That
Section 2
of
Article Six
of the Certificate of Incorporation is hereby amended to
read in its entirety as follows:
Section 2.
Election and Term of Office
. Each director shall hold
office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal. Except as provided in
Section 3
of this
Article Six
, a nominee for director shall be elected to the Board of
Directors at a duly called meeting of the stockholders at which a quorum is present if the votes of shares of capital stock of the Corporation present in person or represented by proxy at the meeting and entitled to vote in the election of directors
cast for such nominees election exceed the votes of shares of capital stock of the Corporation present in person or represented by proxy at the meeting and entitled to vote in the election of directors cast against such
nominees election (with abstentions and broker non-votes not counted as votes cast either for or against that nominees election); provided, however, that directors shall be elected by a
plurality of the votes cast at any duly called meeting of the stockholders for which (i) the secretary of the Corporation receives a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with the
advance notice requirements for stockholder nominees for director set forth in the by-laws of the Corporation; and (ii) such nomination has not been withdrawn by such stockholder on or prior to the tenth (10th) day preceding the date the
Corporation first mails its notice of meeting for such meeting to the stockholders. If directors are elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee. Directors need not be stockholders.
If an incumbent director is not elected by a majority of votes cast (unless, pursuant to the immediately
preceding paragraph, the director election standard is a plurality), the incumbent director shall promptly tender his or her resignation to the Board of Directors for consideration. The Nominating and Corporate Governance Committee will make a
recommendation to the Board of Directors on whether to accept or reject the directors resignation, or whether other action should be taken. The Board of Directors will act on the Nominating and Corporate Governance Committees
recommendation and publicly disclose its decision within ninety (90) days from the date of the certification of the election results. An incumbent director who tenders his or her resignation for consideration will not participate in the
Nominating and Corporate Governance Committees or the Board of Directors recommendation or decision, or any deliberations related thereto.
63
If a directors resignation is accepted by the Board of Directors
pursuant to this
Section 2
, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board of Directors may fill the resulting vacancy pursuant to the provisions of
Section 3
of this
Article Six
or may decrease the size of the Board of Directors pursuant to
Section 1
of this
Article Six
. If a directors resignation is not accepted by the Board of Directors pursuant to this
Section 2
,
such director will continue to serve until such directors successor has been duly elected and qualified or until his or her earlier death, resignation or removal as hereinafter provided.
SECOND:
That
Section 2
of
Article Six
of the Certificate of Incorporation is hereby amended to
read in its entirety as follows:
Section 2.
Election and Term of Office
. Subject to the rights of
the holders of any series of Preferred Stock then outstanding, any director may be removed from office at any time, at a meeting called for that purpose, but only by the affirmative vote of the holders of at least 66-2/3% of the voting power of all
outstanding shares of Common Stock entitled to vote generally in the election of directors, voting together as a single class.
SECOND
: That the terms and provisions of this Certificate of Amendment to the Amended and Restated Certificate of Incorporation were duly adopted by the Board of Directors and the stockholders of
the Corporation in accordance with Section 242 of the General Corporation Law of the State of Delaware and Article Ten of the Amended and Restated Certificate of Incorporation.
* * * * *
IN WITNESS WHEREOF, the undersigned on behalf of the Corporation for the purpose of amending the Amended and Restated
Certificate of Incorporation pursuant to the General Corporation Law of the State of Delaware, under penalties of perjury does hereby declare and certify that this is the act and deed of the Corporation and the facts stated herein are true, and
accordingly has hereunto signed this Certificate of Amendment to the Amended and Restated Certificate of Incorporation this day of
, 2016.
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Inteliquent, Inc.,
a Delaware corporation
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By:
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64
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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x
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY
CARD IS VALID ONLY WHEN SIGNED AND DATED.
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For
All
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Withhold
All
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For All
Except
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To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below.
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The Board of Directors recommends you vote FOR the following:
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¨
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¨
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¨
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1.
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Election of Directors
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Nominees
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01 Rian J.
Wren
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02 James P. Hynes
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03 Joseph A. Beatty 04
Lawrence M. Ingeneri 05 Timothy A. Samples
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06 Edward M. Greenberg
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07 Lauren F. Wright 08 Matthew Carter, Jr.
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The Board of Directors recommends you
vote FOR proposals 2, 3, 4 and 5.
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For
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Against
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Abstain
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2
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To ratify the appointment of Deloitte & Touche LLP as
Inteliquents independent registered public accounting firm.
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¨
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¨
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3
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To approve, by advisory vote, named executive officer
compensation.
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¨
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¨
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4
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To approve an amendment to the Companys Amended and
Restated Certificate of Incorporation to implement a majority voting standard in uncontested elections of directors.
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¨
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5
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To approve an amendment to the Companys Amended and
Restated Certificate of Incorporation to provide that the Companys stockholders may remove any director from office with or without cause.
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¨
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¨
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NOTE:
In their discretion, the
proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof.
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Please indicate if you plan to attend this meeting
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Yes
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No
¨
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Please sign exactly as your name(s)
appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate
or partnership name, by authorized officer.
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy Statement, Annual Report is/are available at
www.proxyvote.com
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INTELIQUENT, INC.
Annual Meeting of Stockholders
May 19, 2016 8:00 AM
This proxy is solicited by the Board of Directors
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The undersigned stockholder(s) of Inteliquent, Inc.
(Inteliquent) hereby appoints Matthew Carter, Jr. and Kurt J. Abkemeier, and each of them acting singly, as proxies of the undersigned, with full power of substitution in each of them to vote all shares of common stock of Inteliquent
which the undersigned is entitled to vote at the Annual Meeting of Stockholders of Inteliquent, to be held in Room 305 at IIT Chicago-Kent College of Law, which is located at 565 W. Adams Street, Chicago, Illinois 60661 on May 19, 2016 beginning at
8:00 a.m. local time, and any adjournments or postponements thereof, upon the matters set forth in the Notice of Annual Meeting dated April 8, 2016 and the related Proxy Statement, copies of which have been received by the undersigned, and in their
discretion upon any business that may properly come before the meeting or any adjournment or postponement thereof. Attendance of the undersigned at the Annual Meeting or any adjournment or postponement thereof will not be deemed to revoke this proxy
unless the undersigned shall affirmatively indicate the intention of the undersigned to vote the shares represented hereby in person prior to the exercise of this proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE BOARDS NOMINEES FOR DIRECTOR IN PROPOSAL 1 AND FOR PROPOSALS 2, 3, 4
AND 5. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF THIS PROXY IS RETURNED AND NO DIRECTION IS GIVEN WITH RESPECT TO THE PROPOSALS, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD.
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Continued and to be signed on reverse side
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